Search This Blog

Thursday, December 31, 2009

Market Thought... fear too soon

The players are selling before the new year. We saw the initial hint of fear earlier this week w/the VIX up as the SP500 was up. The current move continues to takes us off the market's overbought position, and IMO, sets us up for a new year rally.

I still think the Vix breaks down, and that complacency should drive protection. The SP500 is just not at that point yet. I covered my call protections with this weakness.

If market weakness is seen on Jan 4th, I will probably be a buyer into the weakness. If we rally (and I think we rally come Jan 4th) I will be a seller of Jan calls for GS, COST and look to buy SP500 put protection.

Also, a toast to a great 2010. Have a very happy New Year everyone.

Wednesday, December 30, 2009

Market Thought... interesting action

So we have a situation where the push upward is still in play. The internals (key individual stocks) do not suggest a correction just yet.

The Vix came off its oversold position, and the market looks like it is consolidating. I am still waiting for the Vix to really come down before I start protecting.

I have noticed some weakness in IBM this morning. Will enter a second position at 130. (It came really close this morning, but I may have missed it for the next leg up.)

The WSJ is now questioning AAPL's move due to the hype in the iSlate. I recently gave a warning on this, but my warning was centered around a forceful push upward that was occurring to fast. Generally speaking, w/out the iSlate, AAPL is worth more than 210.

Some Good News... i'm engaged :)

Haven't talked about my personnel life in quite some time, but I just wanted to pass along to everyone that I got engaged last night. (She said yes :)

Okay... back to trading... gotta make the money I spent for the ring LOL.

Tuesday, December 29, 2009

Wireless Data

The wireless infrastructure reports just keep coming in, and reports are not so good. There has only been one device that truly maximized the potential of a wireless world, the iPhone. It has sparked uses that many thought were science fiction until they actually witnessed the device. Now, a second network has had issues (1. ATT and 2. O2).

The iPhone is not to blame. Technically, the providers are to blame for not watching the trends and being proactive in adding capacity on their network fast enough. I blame the decision makers at the network providers.

IMO, this is not isolated. With the world seeing the future, the network providers must accommodate to this future. Android has done a decent job (not as good as the iPhone, but good enough) to bring data driven devices at center stage.

My guess is that Verizon will have these issues soon enough, if enough Android phones are sold or if they take on the iPhone. (But the executives at Verizon Wireless have simply done a better job at their wireless build out. So maybe they are on-top of these trends, and are a few steps ahead.)

Whatever the case, the point of this post is not to point fingers, it is to profit from the obvious need to add capacity.

I know Cramer has been tauting the Mobile trend and even created a Mobile Index, if anyone is interested. I try to boil down the sector to one or two top picks, so I can actually trade the trend.

IMO, the best trades, specifically around the build out of new or added capacity toward the infrastructure, is CSCO and QCOM. At the moment both are not ready for an initial position, and need a bit of a consolidation. For CSCO an initial position can be merited around low/mid 23, and for QCOM around 45-46.

Monday, December 28, 2009

Utterly Ridiculous

I am reading his article about how we need 'search neutrality', and I can't help but think this notions is utterly stupid.

Let me explain... Adam tries to tie net neutrality w/ a concept called search neutrality. But there is a huge flaw in this analogy. The flaw is simple... end-user decision versus end-user being forced to use a service.

The pipes are controlled by a few companies. By allowing companies to pay for priority will effectively give the current big boys in the space continued control because they will always be able to out-bid the smaller compeditor. And when there is an external artificial factor allowing a big boy to maintain control, the end user no longer decides on what service he/she uses. History has taught us innovation will suffer. (Case in point, Microsoft's operating system.)

Net Neutrality is important because there are limited number of pipes to use regarding the Internet. A situation can take place where 'the few' can pose a serious barrier of entry to a new player, creating severe limitations on Internet innovation. This simply can not be allowed for innovation sake.

Search Neutrality is a none starter. The reason: With Net Neutrality, anyone can create a search engine. If its better than the rest, it will win. There is NO artificial use of Google. NO ONE is FORCED to USE Google. If I am unhappy with their search results, I will use Ask or Yahoo or or any other engine.

For all the services Google has sparked innovation (ie Cloud computing, mobile OS, online video... etc) does not mean people will use them for search. Google simply hopes people will use Google search, and Google's other services.

71% of 'end users' DECIDED to use Google. This effectively makes the notion of 'Search Neutrality' utterly ridiculous.

A word on Iran

After the events that took place over the weekend (article) I do not know how anyone can view Iran's current form of government as a Theocracy (or at least view it as such w/a straight face).

The current gov. needs to diffuse the situation, and give concessions. Instead they kill and arrest the very people who will act as symbols to inspire the protesters to take protesting to the next level.

Iran will have a full blown revolution on their hands, and come 2010, the veiw of Iran as most Americans currently know it, will be no more.

Market Thought... interesting and AAPL

The VIX is up fairly nicely, while the SP500 is up too.

This is usually a sell signal. I do not want buy SPY put protection just yet, but I have been trimming with this move up or selling calls on others.

I am tempted to buy protection sooner rather than later.

Also, a note on AAPL. This is the first time I ever noticed such a uniform acceptance to AAPL's newest unknown product (iSlate or their tablet). Everyone and their mother is starting to price in this new device already, and I fear a 'sell the news' type of situation when it is finally released. (And I think that will be a buying opportunity.) But if your in AAPL, just be mindful of this situation.

Friday, December 25, 2009

Happy Christmas

Merry Christmas everyone.

Here are a few presents. After the final week of the year, the market may come down some, if that happens, here a a few stocks I have on my top 40 (approximately) list that I plan on keeping in as my top spots for many many years to come:


(I don't own them all, but certainly trade around them. And think the trend for all of them is up in the long run.)

Wednesday, December 23, 2009

head scratcher

All my trades are doing pretty well, except for GS. The financials are sucking wind, and the level of weakness I am seeing makes me scratch my head. I understand the macro economic effects that are plaguing the banks, but to be seeing the level of weakness in GS after a multi-month consolidation is perplexing.

Basically from August until now, the financials have done nothing. Which means the market has been consolidating their monstrous move. That makes complete sense. But there is a chart set-up in GS (w/in the daily chart) that suggests further weakness. That part makes very little sense to me.

IMO, fundamentally speaking, the banks are in a position to stall. To trade range bound until their balance sheets are really cleaned up. There are too many negatives to cause a next leg up rally, but their are multiple positive developments to prevent a break down.

This is where I am scratching my head. These positive developments, which are supporting the general market, are being completely ignored w/in the financial space at the moment or so the chart set up suggests.

At times I question why I even bother with fundamentals. It gives me such an interal conflict at times. Ignoring fundies would spare me much self generated turmoil through the years... 'woah is me' ;) But then again, two very recent examples where the charts gave a very wrong (and negative) impression of the fundamentals were in CHK and PWR. So I guess that 'ying and yang' effect has some merit.

Monday, December 21, 2009

Market Thought... i believe

A few weeks ago I posted the 'Market Thought... maybe, just maybe'. I think we are in the middle of it taking place, and the financials bouncing off their low-end trading range, will facilitate the upward push.

When the VIX does hit the bottom red dotted line, I will be inclined to protect the stocks I do not plan on selling .i.e GS, IBM (after I buy it tomorrow), SQM and AAPL.

A word on IBM

IBM is one of the 40 stocks I follow very closely. While listening to Fast Money via the video on demand (great feature), the chartist -Carter Worth- indicated IBM is on the verge of a long-term breakout. His argument was sound, and it was purely technical. Basically it has been consolidating for 10-11yrs, and at its top line resistance with a very low PE.

Understanding the technical analysis is great, but a long-term rally is really driven by fundamentals. Fortunately enough, IBM has them.

There is a major problem in the world. Apparently the world has become too complex. This thesis famously highlighted by the book 'The Black Swan' or the lesser known 'The Age of the Unthinkable'. IBM's growth driver over the next decade or so will be to solve these complexities. The software is risk analytics or predictive modeling or whatever fancy term you want to give it.

The power house in this field, generally speaking, is a privately held company called SAS. SAS has been doing it for a long ass time, but IBM is really making their way. And, imo, the concept is grossly under-utilized. (This concept is a major reason why I really like VRSK. VRSK owns the insurance and mortgage segment, and will render the rating agencies obsolete, at least for the mortgage rating game.)

Between the two companies, if SAS ever went public, I would invest in SAS. But the next best play is IBM, and since IBM is invest able, invest in the trend with IBM.

At the moment IBM is a buy. It is consolidated, and looking to bounce. And with the above info, I am running out of excuses to not purchase the common.

IBM has their hands in a lot of different pies. A reason for their compressed multiple is due to the amount of money coming in from their consulting biz. Once the sales from the tangible growth drivers kick in, IBM should begin to see some multiple expansion along with nice growth.

Trade - TBT

The TBT looks to want to break from its 48-49 level of resistance. Judging by the action in the 10-yr yields, it most likely will.

Friday, December 18, 2009

Trade - SQM

It consolidated from its resistance level (40), and I think part of its weakness is on the back of POT's weakness. I entered an initial position here, as I think it is on track to rally past 40 in its next leg up.

Keep in mind, SQM is on the heels of two very big areas of growth spanning the next decade: 1. agriculture and 2. alternative energy (lithium producer)

Thursday, December 17, 2009

tisk tisk MSFT

Loading up a page today, and for whatever reason, the legitimate web address did not go through. But guess to where I was redirected?

Now I know Bing just saw a spike in users, but could the above be the reason? I think MSFT was accused of this before. Its definitely shadey considering I never use Bing, nor have I ever used it on the computer I am currently using. So I really do not know why I was redirected there.

Just some food for thought, in case anyone thought GOOG was loosing any lead in search.

At the moment I am not in GOOG, so I have no vested interest, but it is an interesting observation. (And if this observation happens too much on Microsoft Explore browsers, imo, will merit a Justice investigation.)


Queen of Doom brought her estimates of GS down to consensus level. Actually her estimates are still higher than consensus.

I fail to see how this fundamentally changes the view of GS over the next year/few years, considering consensus estimates are still being achieved. But then again, the stock is declining so the market does not agree with me.

Wednesday, December 16, 2009

Trade - Citi (don't believe I am writing this)

The secondary is priced to a point to which entertains me, which means it must be entertaining a TON of others that would never even have looked twice at Citi.

The 3.15 price point is simply too low. Everyone is talking about it, but the fact remains the low price will cause high demand. I will most likely enter Citi on the back of this secondary.

Make no mistake, I am no fan of Citi, their culture, their management or pretty much anything about the company. It is an over bloated piece of crap that should be dismantled. Pandit is a complete joke, and Citi even more of a joke for grossly overpaying for his below average Hedge Fund.

Irrespective, at the price of the secondary and a stable economy, 3.15 is too low of a price. (They still have some pretty interesting assets. They just need a real leader to turn this piece of led into gold.)

Tuesday, December 15, 2009

AAPL chart

The reason I like AAPL, for an initial position, right now is because of the mini consolidation it has seen.

From the powerful move it saw last week, the stock is now hugging the 10 SMA. It is showcasing a mini consolidation from that strong move. The set up looks like AAPL wants to change direction, and push upward.

Fundamentally speaking, if the month-long weakness was due to the Nexus One Google phone, that is a bad reason for sellers to come out. (Lets not forget AAPL is more than an iPhone.)

I purchased the common here, not options. (Would like to ride past 205, but knowing my trading habits I will be trading around it rallying.)

Trade - AAPL

Purchased a few shares of AAPL as an initial position. Will post a chart later tonight.

Monday, December 14, 2009

Nat Gas derivative play - PWR

It is amazing how one event can change the perception of things. With Exxon buying XTO nat gas is in the forefront. A derivative play of nat gas is PWR, especially with their recent purchase of Price Gregory Services.

PWR now looks very interesting for two important reasons, and I think the big boys have realized they threw it away for no reason. (IMO, that is why it is up so nicely today.)

1. the largest windfarm is being constructed

2. PWR positioned themselves beautifully for nat gas construction.

(hind sight is always 20/20)

Nat Gas - wow

Exxon just made a ringing endorsement on Nat. Gas w/the purchase of XTO. I have been playing the nat gas theme with CHK.

I think we can assume other integrated names will be looking at the independent nat gas providers as well.

Also, with big oil getting serious about nat gas, it may start getting pushed in Washington. Should be concerning to the coal sector.

Saturday, December 12, 2009

Trades - and a word on proofreading

Simmer down.

When I re-read some of my weekday posts I cringe sometimes when I notice a missed word or words spelled incorrectly. I can not proofread during the day. I simply lack time. I am not a full time trader. (It would be nice to work for GS and trade full time, and make a very very nice living for myself.) My day job requires me to manage multiple people and manage multiple issues that can have a very real impact on the output of a multi-billion dollar product. Most of the time, on the weekdays, I write my thoughts or my trades, and publish.

I truly enjoy observing current events, understanding their effects and create a trading strategy around it. Trading is a means of monetizing that desire. (and I have worked very hard to become very good at it) I can not satiate this passion at my day job. This blog is a means to vent that passion.

So basically, I don't have time to care about proofreading while i am doing a 12hr day, trying to understand what is going on in the world, then trade on it. All while I am battling an unfriendly boss, and work-related time-consuming issues.

Alright, enough of me venting. Here is a trade I took on Friday, but did not have time to post about it. (if I did I would have re-read the other post and deleted it, but I will keep it up just because of the comment.)

COST is consolidated, sitting on its 50SMA and fundamentally impressive. I will unload when it gets over bought, but I do like it for the long-term.

A stock I have mentioned before and been trading is NLC. The chart justifies an initial position, but I am waiting for NLC to hit the 38 SMA. If this happens, I will enter a position.

Friday, December 11, 2009


I am curious to know how much money, on a percentage basis the Government for all the banks. GS indicated it was about 21% annualized return. (from the reports I have seen, only GS indicated an annualized return)

I am sure Citi and BofA will be some of the highest % gainers, but am curious as to some of the more healthier banks.

Thursday, December 10, 2009

GS is smarter than the Masses

GS is just smart. Even when they cater to the masses.

(The conspiracy folk are just out to make a few bucks on the term 'conspiracy'.)

GS will pay their people w/stock this year. That means executive 'X' will get $1M in stock instead of $1M in cash. All because the masses are protesting the 'cash bonus'.

But the mob is stupid (even though the individual may be smart). With this viral world, the individual became a part of this 'hate Goldman' mob. Where by smart individuals became stupid. (at least for this issue)

Let me explain:

GS is giving stock instead of cash, and stock they can only sell in 5yrs. Cash bonuses are taxed north of 35%, directly sent to local, state and federal taxes. Stock bonuses are not. They act as capital for the company.

So the mob has prevented the state municipalities from receiving much needed cash (in terms of millions of dollars), firmed up the company so that the stock will most likely triple w/in the next few years, and that $1M will most likely become $3M in 5yrs making the execs that much richer.

GS... i still got your back.

Tuesday, December 8, 2009

Market Thought... confusion

There is such a huge ass divide between the heavy weights, its hard for us little people to gauge what is going on. On one hand there is the Queen of Doom talk her book on CNBC in the morning, and suffice it to say she was negative. On the other hand, we have John Paulson (who puts a lot of money where is mouth is) is touting how cheap certain equities are, and that he has no short positions on credit.

What are us schmucks to do?

I do not hesitate to short things, but I have this horrible habit of being fiercely loyal to hand that feeds me. And however cheesy this sounds, that is America. I just see too many good things out there. I don't try to justify why 'the good' is really 'not good'. I accept the good for what it is because there is usually multiple data points that support 'the good'. For instance, the jobs number is real. It is supported by the HUGE productivity being seen. Productivity that is no fucking way sustainable. I say 'no fucking way sustainable' because my company is such an example. I, and my people, have simply too much work (and its obviously fustrating). Things are simply not getting done because of the sheer volume.

I think there are a shit load of other companies like this out there. They need to hire or they run the risk of disrupting meaningful output.

Irrespective of the above, there is a trade happening that we can prepare for. The dollar strengthening is causing FCX (metals) and PBR (oil) to decline. Have been waiting for a correction in these names for some time now, and will take advantage soon.

Want FCX around 68

Want PBR around 45 (43 if we're lucky)

Monday, December 7, 2009

Market Thought... psst, let me tell u a secret

The VIX, as an indicator, only really works at times of fear, not complacency. So when anyone tries to use the VIX as an argument that the market is complacent, they are wrong.

I use many many indicators (I look at over 70 charts to give me a sense of what the market is doing daily... yes daily), but I rely on the VIX quite a bit. For example, it was the VIX that primarily indicated to me to sell my entire portfolio, except for the market short, the Thursday before the weekend Lehman went under.

In a normal market, using the VIX to show a sign of a market top is extremely difficult, but it will show signs of a market bottom (you just have to know how to look at the data). In a trader's market, it will show signs of both. We can witness the irrelevance of the VIX spotting market tops in any bull market, and the relevance in trading bottoms and tops from July 2007-to-present.

At the moment, a quick look at the VIX would suggest we are still in the "trader's market" stage, but I think that is going to change as I highlighted such an opinion about two weeks ago with 'Market Thought... maybe, just maybe'.

The markets are getting to that point where the VIX can go down, so any time media outlets start preaching complacency, its technically not correct.

Don't get me wrong, no indicator should be ignored. But I think we maybe approaching a situation where we will not be able to easily highlight market toppiness w/a low VIX anymore.

Saturday, December 5, 2009

Market Thought... H.F.T.

Anyone looking into yesterday's market action as any measure of anything is looking at the wrong day. IMO, yesterday's roller coaster was due to High Frequency Trading (HFT) programs.

The market rally is for real, it is driven by real earnings and that is why the market has been so resilient. (not animal spirits... look to gold for where that term applies)

Here is a play-by-play of yesterday's action:

1. Jobs report was great. Sending the futures higher, rightfully so. Better jobs number means less defaults, means the banks in particular should go up.

2. AAPL started to crack. Or rather continue its weird trading from Thursday afternoon. Apple's fundamentals do not merit such crazy action. period. Uncertainty causes the type of trading AAPL is seeing. We know everything within the company is fine, except for one thing: Steve Jobs' health.

3. Once AAPL started to crack, so went the market. Why the hell does ONE stock make the entire market to go down. Because the way Program Trading works. Most programs look to many different factors, and weigh these factors, to trigger automated 'sell' responses. AAPL happens to be a market leader, and IMO, the type of break down it saw triggered massive program selling.

4. Once the human aspect got involved to see what was going on, they overruled the computer. AAPL's special situation takes it out of realm of 'market leader', and should not be looked to as a reference. And so normal market action took place.

At the moment, the market is consolidating. But lets not confuse the situation. Specific situations for specific companies are not always indicative of the entire market. Sometimes they are, other times they are not. Its correctly identifying when they matter. (obviously this is not easy to do)

Goldman Sachs is also mentioned as a 'market leader'. However, the financials (nor GS) have not lead this market since August. The financials peaked in Oct, and the market kept moving. That means they have quietly lost that status from a sector rotation, and the market simply did not care. As it should not care. They have their own special situation due to rule changes entering in Jan. But with the new back-drop of a better employment picture, they should become leaders again.

(The daily chart in GS is ugly, but the weekly suggests its current move is a consolidation and a buying opportunity. Especially given the employment picture, and the 2 consecutive months of very high productivity. This is a leading indicator to job hiring that will take place very soon.)

The more and more I think about how much money of the stimulus package was not spent, how the normal economic effect of hiring is taking place, with the new jobs from Alternative Energies and when the rest of the stimulus money will be spent; fundamentally it makes me very very bullish on America and the American stocks.

now, where is my broom? ;)

Friday, December 4, 2009

AAPL... saddened

I fear the worst when I see AAPL's stock move the way it is moving. We all know what it could possibly mean, and I don't even what to say it because I hope all is well with Steve. I really really hope so.

I am going to put in a limit order at 182, although it will be the saddest order I will ever have executed (if the market is predicting). I hope this order does not happen, and the market is being very very wrong.

Wednesday, December 2, 2009

got balls?

Seriously thinking about starting a short position in Gold. I look at these charts and I just itch to take on the trade.

The move has obviously become parabolic, and has been in such a position for a month now. The shear momentum is not sustainable. Prior to November, the move was steady and consistent to the fundamentals of the world economy. But now the momentum is at a point where economic fundamentals does not merit the acceleration.

The scenarios include:

1. Inflation - There is none at the moment, and rates simply do not justify it.

2. Safety - Understandable. Supported by the money being pumped into Treasuries. However banks are getting better capitalized, and Bank of America exiting TARP is a prime example. Things have gotten better.

3. Currencies are obsoleted - That is the ultimate of bullshit reasons. Fiat currencies will never go away.

4. Central bank are buying to diversify - Understandable, but due to #3, stupid.

Whatever the case, I feel the trade is getting tired. Not taking the trade now, but will be waiting to bounce on it. Ideally, would like to position the trade as rates are rising, pushing the dollar higher, because that is when I think it will really collapse.

Will play it via the DZZ.

Tuesday, December 1, 2009

GS - i'm all alone

Everywhere I look, I feel like I am the only one defending Goldman. From every corner of the media universe GS is getting its ass kicked. I feel like the Wall Street Journal wipes its ass with GS.

The indie bloggers have always hated GS, the big boys now hate them, the sophisticated folks are getting in the act via Vanity Fair, and the mass public has been out in front of their building on Broadway with torches for some time now... its not pretty.

I know all the reasons why GS is not liked, seriously I do, and I will argue every point with a legitimate counter-point the haters never seem to fit into their unbiased stories.

Here is what I have to say to haters:

For fuck-sake people, its is a company, a company that makes money. Get over your warp sense of righteousness.

Here is a sense of righteousness, how about Regency Enterprises or Chuck Palahniuk (or whoever owns the rights to the content to Fight Club) sue the hell out of for blatantly infringing on copyrighted characters.

I thought we were all in the market to make money. GS happens to be good at making money. Oh, but wait, the haters make money too.

Those very people that bash GS are the very people (every single fucken one of them) making the most money from the bashing. Some sense of righteousness.

GS, I got your back. Even though I'm all beaten up, and alone in the dark scary woods, I still got your back.

PS... Lloyd, keep performing well as a company, maintain the GS culture and keep your mouth shut. Stop giving the haters fuel. They don't need more. Its already an inferno. k?!?

Technically speaking, this is why I like the stock here: