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Sunday, May 31, 2009

The wanna-be Lions

So I read this article Sunday night, highlighting the GM bankruptcy, and showing who is in charge of reshaping things. (article) I have to say, I am very very glad Ford is still a viable company. The people taking over GM do not know the industry. What is their experience restructuring a broad, highly complex manufacturing base company?

The comparisons between F, GM and Chrysler are huge at the moment. Ford beautifully positioned themselves with the right people, and more importantly the right leader, to handle very complex issues. When I read about GM and Chrysler, and who will take over, I simply get more and more bullish on Ford.

Chrysler proved paper pushing, wanna-be know-it-all financiers, can not turn around this ailing company. So why does the government think their 'paper pushing, wanna-be know-it-alls' can turn around GM?

My personal experience is also leading to my skepticism here. I have experience with smart, but inexperienced management who think they can maximize productivity via a spread sheet analysis versus real world solutions. Real world solutions from experienced leaders with the know-how get muted as these 'wanna-bes' attempt to create a solution via trial and error.

I mean seriously... I'm almost 30, and can analyze a company/situations with best of them, and give (what I think) to be a very honest assessment. This ability has made me a very good investor/trader. Now, I do not fear new challenges, but I would not presume to know how to run (or completely understand) GM just because I analyzed it for a few months on a spread sheet. I would rather see more experienced people, with the back ground of turning manufacturing companies around, to be in charge of GM.

Since paper pushing, spread sheet loving, wanna-be know-it-alls types are in charge, Ford is in the position to really kick some ass.

Market Thought... i will be selling

The last few minutes of Friday's trading was an awe-inspiring moment of short-squeezed that I found interesting and uneasy.

Interesting in that the rise of the last few minutes were, imo, a classic short-squeeze/manipulative move. Uneasy in that it gives a grossly false sense of bullishness.

Like an obvious play book we start hearing Cramer and others use it as a justification to our bull market status. But there are plenty of others that do not... hence the still great divide between bull/bears.

Well which is it? Are we in a bull market or not? Lets take a look...

There are a few indications of a hardcore bull market (since March). Most indicative of this are commodities... obviously. The bullishness can be seen with Gasoline, Oil and Emerging Markets.



Emerging Markets (EEM):

These charts are impressive, but to say they lead this market is incorrect. Simply because they are not.

Notice all started their bullish moves early March. While they may have bottomed in Nov, they started the bullish move WITH THE EQUITIES MARKET.


As such, this is one negative to debase the theory of using commodities and emerging markets as a 'tell' to the US market.

The other negative is that emerging market are a primary function of commodities, and commodities (especially oil) are a function the dollar. And since the dollar collapsed this month, it is supporting commodity prices as a function of economic math... not fundamentals (at the moment).

UUP (dollar relative to a basket of currencies)

Ever since this market started its rally I have been using the 200SMA as the point of real resistance for the
SP500. And observing some of the overbought conditions in above charts, and the threat high gas prices does to the recovery, I am hard pressed to back away from that thesis. With that said however, the month of May was a consolidation month. The SP500 was very flat and sideways for the entire month, with no pull back.

There are a few indication that we are hitting resistance within this rally via the Nasdaq, Semis and Copper.




Basically, things are getting overbought, and we are going to need some real juice to breach these levels.

We can see a melt up, to keep pushing the markets up, but my prudence dictates to take profits and wait. So I will be looking to sell my positions next week, and wait for opportunities to arise.

(Depending on whether or not UNG sees 17-18, I will most likely keep the Nat.gas play.)

Friday, May 29, 2009

My Fear... Price of Gas

Gas prices are simply in a pure bull market. No question about it. The chart is simply bullish, with no hint at potential resistance in this new market dynamic.

I fear it because it will chip away at the consumer. And it will hurt, especially with unemployment so high, and no prospects of the job market improving.
I would love to see a divergence between the movement of Gas/Crude and the Markets. I want to see the markets go up, and gas/crude decline... I just do not know if that will happen.
In any event, the price of gas has me worried... so much so I started to add market protection to the down side via SPY puts.

Thursday, May 28, 2009

Smart Grid play... ITRI

With CSCO's splashy entrance to the smart grid party, an interesting opportunity is coming about. ITRI is a smart-metering company very well positioned as a pure-play to the smart grid space. (They make the physical meters used... one piece of the multi-layered smart grid pie.) My favorite is GE for the overall alternative energy push, but ITRI is a very good concentrated play.

After today's close, ITRI announ
ced they will be doing an offering on June 5th, and the stock subsequently dropped after hours. IMO, this may present a buying opportunity for anyone interested in playing the smart grid push. Not only is it inexpensive for the level of future estimates I have been observing w/respect to the smart grid space, the technicals agree as well. (CSCO recently made the most ambitious of projections for the space to grow +20% a year to 2014.)

A nice initial entry would be near the 50SMA, but 50-51 is where I am looking to get in.

FCX... look to ease up

If you managed to get into FCX around 46, look to ease up here (or around 52). There is top line resistance to FCX and Copper.

A 12-13% gain in 2-3days is very good, and profits should be taken.

Alright Already

I'm not a Wall Street guy (I just know how to beat them at their own game ;)), but when I see articles that threaten the stages of the recovery plan I get nervous and annoyed.

CNBC is reporting that part of the private/public partnership is on uneasy ground because of fear the gov will change the rules mid-game. Very valid concerns.

Obama has to put this issue at ease, and reassure the private sector in this program the rules will not change mid-way. Its one thing to restrict pay to organization that needed to take billions of tax pay money to stay afloat (which I completely agreed with), and another thing to tell companies that are investing how to pay their personnel (this is simply wrong, and is borderline fascist).

Simmer down Washington... simmer down.

Wednesday, May 27, 2009

Market Thought... interesting

No surprise as to what the market did not like today. Around 1:30 it just gave up any sense of limbo, and wanted to go down.

Simple assumption... weak demand for debt puts an uncertainty to fund the stimulus, which threatens the recovery, which merits a declining market. Is this assumption correct? The market said it was... but... the Fed still has a shit load of purchasing power, and will probably start buying soon.

With the Fed support, the stimulus and recovery, (hence markets) should hold, but I guess we are at the mercy of the Fed. As of now, the high 800 SP500 support is still holding.

If not, look for the SP500 to see the 62 SMA.

Tuesday, May 26, 2009

Trade - NatGas (UNG)

I entered a position in UNG (nat.gas). It is pretty oversold, and just about sittin on its low end support.

If GDP will become positive, as many economist are saying, by year end, the use of Nat Gas will increase and now is the time to enter the position.
I am playing for the pop back to 17-18 or so.


(This was a repost as my original did not let the VIX chart expand... this post does)

The VIX (surprisingly enough) jumped up nicely today in early trading.

Was this due to repositioning of the fund or true fear, I do not know. But when I see things like this, and the fact that the SP500 is still holding its high 800 support, it suggests the market may actually hold here.

I eased up on my shorts, and purchased some FCX on weakness today. Also, got into F again (as it is now consolidated).

Market Thought... heads up

The VIX (surprisingly enough) jumped up nicely today in early trading.

Was this due to repositioning of the fund or true fear, I do not know. But when I see things like this, and the fact that the SP500 is still holding its high 800 support, it suggests the market may actually hold here.

I eased up on my shorts, and purchased some FCX on weakness today. Also, got into F again (as it is now consolidated).

Friday, May 22, 2009

Copper... hmmm

Its a tricky one this go around at the moment. The set up, imo, adds to the market uncertainty as I view it as a 'tell' to the market.

It can go either way. Other commodities... ie oil... imo, is exhausted and has no business going up unless the dollar continues to decline. So if oil is the tell to copper then copper should see a pull back (to the 26 level via the JJC).
Once that happens FCX is a buy. If copper breaks from the 200SMA resistance, then the market should not break down, and FCX is a buy, as copper should continue to rally.

Thursday, May 21, 2009

Market Thought... pivotal

A lot of pundit indecision's in the financial news today. I mean two days ago Cramer was saying buy buy buy, and today its 'we may go lower'.

Here is the source of the indecision...

To the right of the red vertical line is the 'rallying' market dynamic. Notice how little buying interest there was except when the market was on the 20SMA. That is bad news. The only support is, imo, a weak one just below today's close. We breach it the market is basically fucked. We can either create a new support level or hit the 62SMA (which is a typical support SMA).
I think we see the 830s. I do not think we break 700 level due to stability in the financial markets, unless credit decides to crunch again... but I doubt that.

WordPress sucks balls

So, my blog is hosted by Yahoo (and they have been nothing but helpful), but the blog service is from WordPress.  WordPress is a tea-bagging service.

Because I am hosted by Yahoo, they will not help me resolve the posting issue, and keep referring me to their support forum, which does not help a novice blogging/techie. (I know a lot about technology and their applications, but not so well at the user level.)

So I decided to create this from blogger, hopefully I can import my previous posts on here and ultimately my full domain. (it will be a shame to lose 3yrs worth of info)