Tuesday, January 09, 2007
Apple is having an amazing day up over $7 on over 110 million shares traded. Reminds me of the last time AAPL moved up big on huge volume, January 10 2006. Steve Jobs spoke at MacWorld and gave a rosy outlook on Apples future and AAPL was off to the races up from $76 to $81 and later peaking at $86.40 on January 12. AAPL was in the 50s by June. I think a short position over the next few days and holding it till the summer will be very rewarding.
The market appears to be gradually slipping away from the grasps of the bulls. The Nasdaq has failed to close at new new highs since November 24 which is over 6 weeks. While the Dow did close at new highs the week before New Years it was on very light volume.The S&P has failed to make new highs since mid December and appears to be topping. In these 3 indices there has been a noticable lack of volume on up swings while a surge of volume accompanies most down swings. To me the first trading day of the year was the most telling with the Dow advancing upwards to 12630 a gain of almost 170 points for the day before reversing, going negative for a while and than finally rallying enough to close up 13 points. The huge volume that day indicates that this could likely have been the peak of the current bull market.
Monday, January 08, 2007
ECONOMIC AND TECHNICAL INDICATORS.
Having spent the better part of the day, sifting through economic and technical data to give me a better idea of where we are headed, I just wanted to post the more relevant of these indicators.
The NYSE New High/ New Low ratio is currently at 89%. Any reading above 85% is bullish while a reading below 20% is bearish. A drop below 70% is considered bearish. We have had a bullish reading since mid October with the indicator rising to over 95% at times over the last few months . We have cooled off a little in recent weeks though we can still cool off a lot more. So while this indicator is very bullish for now, the better part of this rally could be behind us and we do need to keep an eye out especially for a drop below 70.
The NYSE 30 day advance/decline oscillator is currently at 165 having spent the better part of the fall in the 200+ territory indicating an overbought and therefore potentially bearish environment. Below negative 200 would be considered oversold and therefore bullish and we are not even close to those levels. Hence a sharp pullback in the market, may not be a bad thing to create an environment of oversold conditions and hence, a better risk to reward ratio going forward.
Now to one of my favorite indicators , the AAII sentiment index ratio. Many pundits are screaming that we are in times of extreme investor pessimism and others are calling it a time of extreme exhuberance. So you be the judge. The indicator is currently at 63% and though not at extreme bullish levels, we are more bullish than bearish as a whole. A reading above 70 indicates bullishness and below 30 is bearish. So we are a whole lot closer to bullish than bearish and this indicator has been moving upwards in recent months.
Mutual Fund cash levels are at historic lows of 4.4%. I hear a lot of commentators talking about all the excess cash sitting on the sidelines waiting to be deployed in the equity markets. This indicator however tells me that mutual funds are holding less cash than at any time since the 2000 market top. This indicator looks very bearish to me and I do think it is a fairly useful gauge of future market performance.
Can the market continue going higher ? It definately can. But I do feel we are at a level where the risk outweighs the reward. I do feel that cash sitting in a 5% money market account will outperform the indices this year.
The NYSE New High/ New Low ratio is currently at 89%. Any reading above 85% is bullish while a reading below 20% is bearish. A drop below 70% is considered bearish. We have had a bullish reading since mid October with the indicator rising to over 95% at times over the last few months . We have cooled off a little in recent weeks though we can still cool off a lot more. So while this indicator is very bullish for now, the better part of this rally could be behind us and we do need to keep an eye out especially for a drop below 70.
The NYSE 30 day advance/decline oscillator is currently at 165 having spent the better part of the fall in the 200+ territory indicating an overbought and therefore potentially bearish environment. Below negative 200 would be considered oversold and therefore bullish and we are not even close to those levels. Hence a sharp pullback in the market, may not be a bad thing to create an environment of oversold conditions and hence, a better risk to reward ratio going forward.
Now to one of my favorite indicators , the AAII sentiment index ratio. Many pundits are screaming that we are in times of extreme investor pessimism and others are calling it a time of extreme exhuberance. So you be the judge. The indicator is currently at 63% and though not at extreme bullish levels, we are more bullish than bearish as a whole. A reading above 70 indicates bullishness and below 30 is bearish. So we are a whole lot closer to bullish than bearish and this indicator has been moving upwards in recent months.
Mutual Fund cash levels are at historic lows of 4.4%. I hear a lot of commentators talking about all the excess cash sitting on the sidelines waiting to be deployed in the equity markets. This indicator however tells me that mutual funds are holding less cash than at any time since the 2000 market top. This indicator looks very bearish to me and I do think it is a fairly useful gauge of future market performance.
Can the market continue going higher ? It definately can. But I do feel we are at a level where the risk outweighs the reward. I do feel that cash sitting in a 5% money market account will outperform the indices this year.
Friday, January 05, 2007
WEEK 1 2007
1 week down (almost) 51 to go. Where does this put us ? What strategy does one pursue in the coming weeks ? How does one preserve capital yet maximize gains and etch out absolute returns in the double digits ? If I were not looking for double digit returns I would not hesitate to switch to the money markets at 5%. Iceland is offering me 13% for my money. The Chinese Yuan is a safe bet assuming the continuation of appreciation vs the US Dollar. The Euro has broken overhead resisitance in recent months and is heading for all time highs vs the USD. It looks to be a good safe haven for capital. I like Gold too in the form of Goldtrust Shares as it settles along support.
Job growth rose unexpectedly which has dampened investors expecting a Fed rate cut.If the economy continues to show strength , a rate raise would not surprise me. When was the last time the Fed lowered rates into a rising stock market ? I don't know but all I do know is that when the Fed does decide to cut rates, it will be to the backdrop of investors fleeing the US equity markets.
Job growth rose unexpectedly which has dampened investors expecting a Fed rate cut.If the economy continues to show strength , a rate raise would not surprise me. When was the last time the Fed lowered rates into a rising stock market ? I don't know but all I do know is that when the Fed does decide to cut rates, it will be to the backdrop of investors fleeing the US equity markets.
Wednesday, January 03, 2007
BULLS, BEARS AND BOB (Nardelli)
According to this study the 2006 shopping seaon was unimpressive and yet the markets are in bull mode due to CEO Bob Nardelli resigning from Home Depot and Walmart seeing better than expected December sales after reducing forecast the previous month. So in essence Walmart set the bar so low that they had to beat it no matter what. Add in a better than expected manufacturing index ISM number of 51.4 and a less than expected 0.2 fall in construction.
So lets examine all this. Could Nardelli have resigned because he sees a slowdown in HDs earnings ? He gets out before the shit hits the fan with a fat severance package. I'd be shorting this surge in HDs stock price in the coming days. I seriously doubt Nardelli would have quit if he saw good prospects down the line.
Walmart had already lowered its outlook for December after a drop in same store sales for the first time in 10 years in November. The fact they beat December estimates is nothing to cheer about. The question is how did all the other retailers do ? We will find out tomorrow.
On to the ISM manufacturing report. Up 51.4 from the Novembers 49.5. FYI Below 50 indicates a contraction in the manufacturing economy and above 50 correlates to expansion. A rise looks great but lets look at the history of the ISM for the last 8 years. Sure looks to me that the index peaked in 2004 and is showing a slowdown. It is highly likely we could see numbers below 50 in the coming months signalling a recession. One item to notice is that last time round the markets peaked in January of 2000 yet the index was positive and only started signalling a recession in August.
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
2006 54.8 56.7 55.2 57.3 54.4 53.8 54.7 54.5 52.9 51.2 49.5 51.4
2005 56.3 55.6 55.3 53.8 51.8 54.0 56.4 53.5 58.0 58.1 57.3 55.6
2004 62.9 62.2 62.3 63.0 62.9 61.5 61.5 59.6 58.0 56.8 56.9 58.6
2003 52.8 49.9 46.4 46.5 50.0 50.5 52.3 55.5 54.4 57.2 60.6 63.2
2002 49.1 53.2 55.0 54.4 55.2 55.8 51.2 50.9 51.3 50.0 49.2 53.1
2001 41.4 41.1 42.6 43.1 41.9 43.9 44.7 48.3 47.7 40.5 45.0 46.7
2000 56.7 55.8 54.9 54.7 53.2 51.4 52.5 49.9 49.7 48.7 48.5 43.9
1999 50.6 51.7 52.4 52.3 54.3 55.8 53.6 54.8 57.0 57.2 58.1 57.8
Constrution has pretty much been covered by all segments of the media. By now we all now that housing construction is down , sales are down, price appreciation has turned into depreciation and huge inventories of unsold homes glut the market. What does a less than expected fall in contruction mean ? That the housing market has bottomed out ? Highly unlikely with all the inventory glut. Real estate is a cycle like another other commodity or market for that matter. In real estate its usually the 15 year cycle where the market peaked in 1990, fell through the early 90s before bottoming around 1994-95 and then based till 1997-98 before rising and peaking in 2005.So its highly unlikely we will bottom in real estate especially after such a fantastic runup of 100-200% in many parts if the country. I would not expect a bottom till 2008-09 at the earliest. So much for new home construction and the home builders for now.
So lets examine all this. Could Nardelli have resigned because he sees a slowdown in HDs earnings ? He gets out before the shit hits the fan with a fat severance package. I'd be shorting this surge in HDs stock price in the coming days. I seriously doubt Nardelli would have quit if he saw good prospects down the line.
Walmart had already lowered its outlook for December after a drop in same store sales for the first time in 10 years in November. The fact they beat December estimates is nothing to cheer about. The question is how did all the other retailers do ? We will find out tomorrow.
On to the ISM manufacturing report. Up 51.4 from the Novembers 49.5. FYI Below 50 indicates a contraction in the manufacturing economy and above 50 correlates to expansion. A rise looks great but lets look at the history of the ISM for the last 8 years. Sure looks to me that the index peaked in 2004 and is showing a slowdown. It is highly likely we could see numbers below 50 in the coming months signalling a recession. One item to notice is that last time round the markets peaked in January of 2000 yet the index was positive and only started signalling a recession in August.
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
2006 54.8 56.7 55.2 57.3 54.4 53.8 54.7 54.5 52.9 51.2 49.5 51.4
2005 56.3 55.6 55.3 53.8 51.8 54.0 56.4 53.5 58.0 58.1 57.3 55.6
2004 62.9 62.2 62.3 63.0 62.9 61.5 61.5 59.6 58.0 56.8 56.9 58.6
2003 52.8 49.9 46.4 46.5 50.0 50.5 52.3 55.5 54.4 57.2 60.6 63.2
2002 49.1 53.2 55.0 54.4 55.2 55.8 51.2 50.9 51.3 50.0 49.2 53.1
2001 41.4 41.1 42.6 43.1 41.9 43.9 44.7 48.3 47.7 40.5 45.0 46.7
2000 56.7 55.8 54.9 54.7 53.2 51.4 52.5 49.9 49.7 48.7 48.5 43.9
1999 50.6 51.7 52.4 52.3 54.3 55.8 53.6 54.8 57.0 57.2 58.1 57.8
Constrution has pretty much been covered by all segments of the media. By now we all now that housing construction is down , sales are down, price appreciation has turned into depreciation and huge inventories of unsold homes glut the market. What does a less than expected fall in contruction mean ? That the housing market has bottomed out ? Highly unlikely with all the inventory glut. Real estate is a cycle like another other commodity or market for that matter. In real estate its usually the 15 year cycle where the market peaked in 1990, fell through the early 90s before bottoming around 1994-95 and then based till 1997-98 before rising and peaking in 2005.So its highly unlikely we will bottom in real estate especially after such a fantastic runup of 100-200% in many parts if the country. I would not expect a bottom till 2008-09 at the earliest. So much for new home construction and the home builders for now.
Tuesday, January 02, 2007
CONTEMPLATIONS, REFLECTIONS AND CLAIRVOYANCE
Looking at the past year, we've experienced ups and downs in the market. We started off strong, stunmbled in May recovered in August and had a very strong rally into the close of the year. With the Dow hitting all time highs and the S&P 500 not too far behind , 2006 was a great year for those long the equity indices. In individual sectors and stocks we have had a mix of good and bad.
First with the good. RIMM had an exceptional year. A nice 100% gain though one could have made more if they traded it through highs and lows. CRS was positively on fire through the early part of the year and one of my big winners (until I was stopped out). TIE was another rocket in the same group as CRS and I sort of regret passing TIE over for CRS. It was a toss up between TIE, ATI and CRS and I choose the slowest horse. Oh well, a 70% gain isn't so bad though I missed out on a 150% plus on the other 2. Speaking off ATI. The chart says it all. How could I have missed it ? What a Monster !! Speaking of monster the energy drink, here is a chart of HANS. I got stopped out early in the year with a small profit. I hated what happened next though I did manage to get short in the $180-200 range and ride it down to $120-130 pre-split . NTRI rocketed upwards with no stopping it till May and than recovered nicely for another big run which ended in what looks like a double top as evident from the charts ( May and December peaks). ZOLT was one hell off a stock and though it closed the year badly, it made a lot of people very rich. ERS could well have been the stock off the year if people had been smart enough to get off in early May. 600% gain in 5 months . Spectacular !! Than another huge potential gain for anyone going short. WOW !! Just look at the charts.
Now to the not so good. Does anyone think GOOG's best days are behind it ? This is one stock that is all over the place. How is someone supposed to stay long or short a stock like this ? AAPL another totally unpredictable stock. Great for trading though. Look how RACK got decimated midyear though it pulled through at the end. NETL was downright ugly. Look at this crazy stock IFON . Jan though April downtrend, huge spike in April till early June and than total collapse through July before a couple of run ups and than a reversal to a downtrend. Great for trading by the seat of your pants. A killer in most ways though. This was a pretty crapy year for EBAY till the lows in June July. YHOO had a pretty terrible year. It was a year that had it all. The good, the bad and the ugly.
First with the good. RIMM had an exceptional year. A nice 100% gain though one could have made more if they traded it through highs and lows. CRS was positively on fire through the early part of the year and one of my big winners (until I was stopped out). TIE was another rocket in the same group as CRS and I sort of regret passing TIE over for CRS. It was a toss up between TIE, ATI and CRS and I choose the slowest horse. Oh well, a 70% gain isn't so bad though I missed out on a 150% plus on the other 2. Speaking off ATI. The chart says it all. How could I have missed it ? What a Monster !! Speaking of monster the energy drink, here is a chart of HANS. I got stopped out early in the year with a small profit. I hated what happened next though I did manage to get short in the $180-200 range and ride it down to $120-130 pre-split . NTRI rocketed upwards with no stopping it till May and than recovered nicely for another big run which ended in what looks like a double top as evident from the charts ( May and December peaks). ZOLT was one hell off a stock and though it closed the year badly, it made a lot of people very rich. ERS could well have been the stock off the year if people had been smart enough to get off in early May. 600% gain in 5 months . Spectacular !! Than another huge potential gain for anyone going short. WOW !! Just look at the charts.
Now to the not so good. Does anyone think GOOG's best days are behind it ? This is one stock that is all over the place. How is someone supposed to stay long or short a stock like this ? AAPL another totally unpredictable stock. Great for trading though. Look how RACK got decimated midyear though it pulled through at the end. NETL was downright ugly. Look at this crazy stock IFON . Jan though April downtrend, huge spike in April till early June and than total collapse through July before a couple of run ups and than a reversal to a downtrend. Great for trading by the seat of your pants. A killer in most ways though. This was a pretty crapy year for EBAY till the lows in June July. YHOO had a pretty terrible year. It was a year that had it all. The good, the bad and the ugly.
Friday, December 22, 2006
ECONOMIC HEADLINES
RIMM misses by penny
NEWS corp sends Direct TV to Liberty
PERSONAL spending up in November (Playstation 3 and Wii effect?)
TOYOTA forecasts record sales
ARIZONA is fastest growing state
GODFATHER of the Merc
Happy holidays. I am off to enjoy mine.
NEWS corp sends Direct TV to Liberty
PERSONAL spending up in November (Playstation 3 and Wii effect?)
TOYOTA forecasts record sales
ARIZONA is fastest growing state
GODFATHER of the Merc
Happy holidays. I am off to enjoy mine.
Thursday, December 21, 2006
HEADLINES AND ANALYSIS
LEADING index up
GDP revised lower
FEARLESS forecasts
The market is evidently slowing as the data suggests. Yet analysts are overwhelming bullish about the coming year 2007. The 'soft-landing' theory is still in play and is mostly likely fully priced in to the markets. Any deviation from this theory and evidence of a hard landing may lead to a a fleeting exit from the equity markets and potentially a large drop in the indices. We have had an extremely bullish run from the June lows- nearly 1800 points on the Dow, almost 200 on the S&P 500 and over 400 on the NASDAQ. A big portion of this move came during the typically bearish months of September and October while we have had a rather mellow November and December. While January is a typically bullish month, we could see a market pullback especially if the data continues so suggest we are in for something more than a 'soft-landing'. For now I continue to be bearish equities in general with short positions in several leading tech stocks - GOOG, AAPL, RIMM and AKAM to name a few.
I am long energy for now as well as metal producers. I also have index shorts in anticipation of a broad market pullback.
GDP revised lower
FEARLESS forecasts
The market is evidently slowing as the data suggests. Yet analysts are overwhelming bullish about the coming year 2007. The 'soft-landing' theory is still in play and is mostly likely fully priced in to the markets. Any deviation from this theory and evidence of a hard landing may lead to a a fleeting exit from the equity markets and potentially a large drop in the indices. We have had an extremely bullish run from the June lows- nearly 1800 points on the Dow, almost 200 on the S&P 500 and over 400 on the NASDAQ. A big portion of this move came during the typically bearish months of September and October while we have had a rather mellow November and December. While January is a typically bullish month, we could see a market pullback especially if the data continues so suggest we are in for something more than a 'soft-landing'. For now I continue to be bearish equities in general with short positions in several leading tech stocks - GOOG, AAPL, RIMM and AKAM to name a few.
I am long energy for now as well as metal producers. I also have index shorts in anticipation of a broad market pullback.
Wednesday, December 20, 2006
HEADLINES
THAI turnaround unleashes rally
CAUTION on FedEx
ARE all hedge fund investors really rich ?
ANOTHER tech buyout
BIGGEST innovation surprises for 2007
MORTGAGE applications drop
CAUTION on FedEx
ARE all hedge fund investors really rich ?
ANOTHER tech buyout
BIGGEST innovation surprises for 2007
MORTGAGE applications drop
Tuesday, December 19, 2006
ECONOMIC HEADLINES
THAILAND takes a plunge
INFLATION rears its ugly head
CIRCUIT CITY short circuited
10 HOUSING markets to fall hardest
TRANSATLANTIC exchange merger approved
INFLATION rears its ugly head
CIRCUIT CITY short circuited
10 HOUSING markets to fall hardest
TRANSATLANTIC exchange merger approved
Monday, December 18, 2006
START TO ANOTHER WEEK
SOARING current account deficit
IS it me or does this happen every week
RISK free trade ?
YET another buyout
COULD buyouts spell trouble ahead ?
SURVIVING the Real Estate Bust ( which hasn't even happened !@!)
HANS (makers of Monster) a potential takeover candidate ?
IS it me or does this happen every week
RISK free trade ?
YET another buyout
COULD buyouts spell trouble ahead ?
SURVIVING the Real Estate Bust ( which hasn't even happened !@!)
HANS (makers of Monster) a potential takeover candidate ?
Saturday, December 16, 2006
FINANCE HEADLINES
BEIJING and Washington sign nuclear reactor agreement pact
INFLATION MIA ?
US will be eclipsed by China - Jim Cramer
YAHOO playing catch up with Google
DOLLARS biggest gain in 4 months
ALL time high for Dow
GOOD times ahead ?
INFLATION MIA ?
US will be eclipsed by China - Jim Cramer
YAHOO playing catch up with Google
DOLLARS biggest gain in 4 months
ALL time high for Dow
GOOD times ahead ?
Friday, December 15, 2006
ARTICLES OF CONFLICTING INTEREST
REAL estate market going to hell
FIRST time buyers getting back in real estate
RECESSION ahead (Merrill Lynchs David Rosenberg courtsey of Bill Cara)
BIGGEST Japanese takeover ever
FIRST time buyers getting back in real estate
RECESSION ahead (Merrill Lynchs David Rosenberg courtsey of Bill Cara)
BIGGEST Japanese takeover ever
Sunday, October 29, 2006
BUSINESS HEADLINES
http://news.yahoo.com/s/ap/20061029/ap_on_go_ot/america_the_bankrupt
http://news.yahoo.com/s/ap/20061028/ap_on_re_as/china_iraq_oil
http://news.yahoo.com/s/ap/20061029/ap_on_re_la_am_ca/bolivia_nationalization
http://www.bloomberg.com/apps/news?pid=20601087&sid=aEdLpEIQMQFw&refer=home
http://www.thestreet.com/_dm/newsanalysis/retail/10318379.html
http://news.yahoo.com/s/ap/20061028/ap_on_re_as/china_iraq_oil
http://news.yahoo.com/s/ap/20061029/ap_on_re_la_am_ca/bolivia_nationalization
http://www.bloomberg.com/apps/news?pid=20601087&sid=aEdLpEIQMQFw&refer=home
http://www.thestreet.com/_dm/newsanalysis/retail/10318379.html
Tuesday, August 01, 2006
DESPERATE LONGS
Todays market reflects the desperation of Longs. Valiantly defending the 11000 ( Fridays low)levels on the Dow and trying to hold the S&P above its 200MA at around 1270. Valiant but foolish. Inflation, slowing economic growth, sharp slowdown in the housing market, decline of the dollar , record gas prices, slow down in consumer spending , you name it things are getting bad. The market will follow suit. You cannot artificially hold up the equity market which what is happening now. The powers that be are projecting an 'all is well' scenario while they quitely unload their positions. You do not want to be left holding the bag when it all comes tumbling down. When liquidity dries up the bids disappear and things get ugly, real ugly and real fast. Now is the time to read the data and have conviction. Conviction that things will get really bad in the equity markets before they get better.
Friday, July 21, 2006
DEAD CAT BOUNCE CONFIRMED
Wow. Markets getting ugly huh ? Despite that 200+ point rally we had on the Dow and the great Nasdaq comeback, we are still firmly in a downtrend. Huge rallies occur in bear markets, thats a given when conditions hit deeply oversold, you have shorts who book profits and start covering sending prices higher while bargain hunters jump in to pick up what seems 'undervalued' stocks. Than you have the momentum traders who follow tail and before you know it, a nice rally develops. The thing I love most about big rallies in a bear market is that it gives you the chance to short more stocks. Look for stocks that rally the most but, are still in a downtrend and have rallied to a resistance point be it the 50 or 200 MA or a downtrend line. Than go ahead and short some more. I love this game.
Wednesday, July 12, 2006
DOWNSIDE DAY
Nice downside we had today. Markets sucked if you were on the longside the whole of today. But in my case I am 50% long and 100% short so math question of the day. What is the total net sum of my positions ? 50% Short . Yep short as I like to be. I am getting sick of Google jumping around. A great GOOG play is buying September put options. They move around alot . Look for GOOG to score a 70+ on the hourly RSI and buy some Puts or atleast thats what I enjoy doing. Talking about POS, will you take a look at HANS. Made a 52 week high on the weakest volume last week and its been downhill since than. I keep trading in and out of my HANS short positions using RSI as my guide . Looking at GOOG and HANS they are both trading near the upper ends of their Bollinger bands and I would look for a move towards the middle of the band or even the lower end in the coming weeks.
Now to move on to a bullish picture . Even in these bearish times its nice to keep an eye on stocks making new highs on huge volume. Take a look at MEA. Its been spiralling upwards on way above normal volume. Interesting stock to keep an eye on. Might be overextended with the Bollinger bands and all but would not be surprised at further upside.
Thursday, July 06, 2006
WHAT TO EXPECT IN THE COMING WEEKS
The markets have been moving higher as of late though with a substantial decrease in volume. This is telling us that the rally lacks the strength to take us to new highs. The 11,700 on the DOW will be the high for this year. I am expecting the markets to break down in the weeks ahead with an occasional plunge which should take us below 10,000 on the DOW and under 2000 on the Nasdaq. As I write I am seeing increasing sign of a sell off across the board with many leaders showing weakness. I would use this opportunity to add to my short positions particularly in HANS and GOOG.
Monday, July 03, 2006
LOOKING TO TAKE SHORT POSITION IN HANS
Today I am looking to take a short position in HANS. The price movement is showing a fade play i.e the big money is trying to take price back up to 52 week high around $202 and sell off the stock. There was plenty of window dressing on Friday end of close with HANS jumping $5 bucks around 3.55pm with large blocks being traded. Money managers trying to improve the look of their portfolios by acting as if they held the best performing stocks of the quarter. The increases in price over the last two weeks, has come on relatively lower volume and todays volume is not impressive, in comparison to the volume last time around when HANS headed to $200. Added to this, is a stock that is trading at 65x trailing earnings which is extremely high, for a $4.5 billion plus market capitalized company which sells soft and energy drinks - infact one energy drink, Monster which seems to have the market in a spin. Competition is fierce and energy drinks for the most part are a fad which can go either way. Monster may be hot today but, there are no guarantee it will be hot 6 months from now and with ever changing consumer tastes, a one trick pony such as HANS is way overpriced especially taking into account that the markets are setting up for a further drop to the downside.
Thursday, June 29, 2006
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.
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