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Tuesday, November 30, 2010

some charts...

GOOG - Upon the open today, GOOG broke from the 10 SMA on the weekly and 50 SMA on the daily support. Unfortunately, with these supports breaking, there was a technical cliff to the 550 area.

I do like GOOG, despite it biting me in the ass over-and-over again, every time I trade it. I will wait for the dust to settle, and re-enter around 550.

IBM - Sitting on the daily support and oversold, I added.

Its trailing PE is 12.86 with a 15% 5yr eps growth rate. (ORCL, the IBM wannabe, has a forward PE of 12.26, while IBM has a forward PE of 11.24.)

some trades...

1. I took a hit on GOOG. Sold in the AM, and am looking to purchase March 2011 calls near 550.

2. I rotated out of Jan 2011 AAPL calls, and into April 2011 calls. (remove the accelerated time decay)

3. Adding to IBM when I can via Apr 2011 140 calls.

Monday, November 29, 2010

Market Thought... nice comeback

The market had a nice turn around today. Believe it or not, but my market thesis still has not changed from my last market thought post 'nothing new'. (Hence the political blabber, but seriously Julian Assange and the government leakers should be prosecuted for espionage :)

There were a few interesting developments since Nov 22 (the 'nothing new' post):

1. Economic data the week of 11/22 was simply kick ass. I mean kick ass!!! (Has anyone seen a chart of, MWW? Its kick ass because of the data released.)

2. California subsidizes other state economies, just like Germany will have to do in Europe. That is Germany's cost of a unified currency. And Germany's all time high confidence indicates the Germans do not mind this position. (p.s. the Euro will not fail. Too many powerful people want it to succeed. They will figure it out. They are and have been adjusting economies accordingly to make it work. If anyone did not realize that in May 2010, they are fooling themselves.)

3. The market has been consolidating for 4 weeks, and it is approaching an interesting spring board.

The light support around 1174 is about to get complimented by the 62SMA. Not to mention a spike in the VIX, which is overbought.

A few notes:

1. IBM selling off today?!? Big boys, grow a pair. Seriously. With a trailing PE of 13, IBM will be trading at 148 by year end. That is at a MINIMUM.

2. AAPL - I read this article about Apple having a minimal presence in Brazil. Considering Brazil is my favorite Emerging Market, if true, I am pretty speechless by this. AAPL better get their ass in Brazil, ASAP. I mean, why wouldn't a company want exposure to a rapidly growing-economically healthy middle class?

Sunday, November 28, 2010

WTF Wikileaks?!?

What corruption has the most recent Wikileak shed light on? Nothing.

I fail to understand what is motivating Julian Assange to release this information. After reading the points from Politico, there is nothing on here of substance to the average citizen of any country. There is only information that can cause ripples in a relationship.

I am all for transparency, especially when it is dealing with acts of theft or illegal activity that is otherwise corrosive to a functioning society. The information that Wikileaks released does not shed light on a corrosive aspect of society. As such, the documents published are irrelevant to citizens of the respective societies.

Instead the leaks were merely back room conversations and dealings which are obviously a necessity in any form of government. They do nothing but compromise those dealings.

Julian Assange, and those leaking these documents, are compromising a functioning society, especially a democratic one. And if their objective is to compromise it, they are against it.

The only people that would care for the type of information Wikileaks has released are other governments. Where is the benefit to the average citizen?

Basically, Wikileaks is conducting espionage with no value added information to society.

Friday, November 26, 2010

Do your Homework

I am listening to CNBC continuously talk about Portugal, and am simply getting too frustrated to not post about this.

Do not just listen to commentary. All qualitative commentary is bullshit, including blanket statements made on this blog. (Although I make statements because I do the homework, but when I do not state the fact to which I derive the statement, the statement should be questioned.)

The best example of this is by Brentt Arends from Market Watch who got so frustrated by an analyst Chris Whalen making bullshit statements about California that he set out an article that laid out the numbers and truth. (I wish there were more articles like this from investigative reporters, but it is just easier to provide commentary.)

Portugal is not Greece. Ireland is not Greece. Spain is in no way even in the same concept of Greece. There is no such thing as PIGS, except for the 'G'. (Ireland had a lot more flexibility than the very lightly traded CDS market projected.) IMO, Ireland did not need the bailout, but the EU did it simply to preempt and market perception.

I have personally seen Greece mascaraed as a 2nd rate country when I witnessed its 3rd world character year after year visiting the country.

Look up economies of Portugal, Ireland and Spain via the World Factbook (from the CIA website), and you can blatantly see the differences between all three. Look at their debt ratios, their revenues verse expenditures. Clear differences exist. SEE FOR YOURSELF!

Obviously there are some issues, as there are ALWAYS issues to address, but actions are being taken and the economic measures to trim waste is happening. The cost savings are very good steps in the right direction.

aerospace boom

The other day Cramer was pushing multiple American manufactures, and he mentioned the concept of an 'Aerospace Boom'. He stated that aerospace booms last for 7 years, and we are on the verge of it.

I found that statement to be interesting. But his voice is only one aspect of the 'chatter', and I needed verification before I can start taking his word seriously. (He provided no numbers to justify the claim.)

This morning I got the verification while combing the web. Both Boeing and Airbus are seeking increase production from their suppliers. Blatantly bullish verification.

Cramer mentioned HON and BA, as the American manufactures to take advantage of the boom. I agree with him as they are really good companies and stocks. However, I find ATI to be the best leveraged to this manufacturing cycle. They took a bit of a hit this quarter due to a miss, but I have been keeping them on my radar for years. (I think they are one of the best, if not the best, in speciality alloys specifically geared to aerospace, oil and defense.)

Technically, they look interesting. The set up is not overly bullish, but does merit a light entry point.

The top end resistance is around 56, while the low end is around 40. But when, I see articles indicating increase in production, I do not expect to see 40 again and expect a new trading dynamic.

At the moment ATI is being supported by the SMAs, and off the top-end resistance, it is enough to merit an initial light entry point. I say light entry because ATI is overbought, and the chart set up indicates a higher probability of it testing between 46-48. Around 46 I will get very bullish, and enter a heavier position.

Thursday, November 25, 2010

Tuesday, November 23, 2010

J. Crew... shame

One of my favorite growth stories has told the market to go fuck itself today. They went private, at a still-relatively-inexpensive valuation. I guess management got tired of the depressed valuation, and took advantage.

The market is inexpensive!

here is a 'blackswan'

North fires at South Korea.

This reminds me an awful lot of the Israel skirmish mentioned in my 'maybe, maybe not' post. This too will end as suddenly as it began, and the market will push upward.

The logical, and very sinister, person in me tells me this is purely economical.

North Korea can not wipe its own ass without China's permission, let alone fire artillery shells at a island off of South Korea. Just so happens some instability is in China's favor at the moment. Instability creates discounts in market prices, and will help China cool some of its inflation issues. (Obviously a short-term thing, but in conjunction with the Hedge Fund probes and already stated price capping on food items, it helps.)

I know this is conspiracy talk, but if China wanted/needed stability, this would not be allowed. Or severe punishment would be pushed on to the North.

Or maybe there is another reason they allowed this to happen. But if this attack was caused by a rouge aggressive state, then China's actions should be very severe.

Very curious as to China's reaction via actions, not words.

Monday, November 22, 2010

Market Thought... nothing new

Gobble Gobble week is not the best weeks to gauge the market. I was expecting there to be very short-term weakness to allow the market to rest, which would re-assure a rally. Seems like this is happening, although there was nice strength toward the end of the day today.

In this short-term negative, the market may retest the 1074 mark seen a couple of days ago. It already tested the high end of that support today. Although, to add a bit of a contradiction, names like AAPL, IBM and GOOG do indicate a short-term push upward.

I still very much believe the market thesis presented in the Market Thought posts 'maybe, maybe not' and 'upside'.

Thursday, November 18, 2010

Market Thought... upside

In previous Market Thought posts I provided the fundamental, macro conditions that will facilitate upside. To date, I only pointed out the 1oyr treasury as the most important indicator to a year end rally (which is supported by the fundamental thesis).

Here is a second technical indicator for a year end rally.

IMO, the VIX over the SP500 for the current market dynamic tells the story. March 2009 to present represents the current rally, so from a current rally perspective we should expect the VIX to hit new lows before the end of the year.

At the start of 2010 the VIX bottomed at the indicated level. Months later the SP500 moved to a new rally high, and the VIX saw a new rally low. After this, the Euro mess facilitated unusually high VIX activity. (Normal VIX activity should be the mid teens to the high20s/low 30s, when omitting the credit crisis and threats of instability.)

Currently, the market is near a new rally high, yet the VIX is still slightly above the start of 2010 mark. With the stability justified via my fundamental thesis, and still very inexpensive market valuations, a very interesting set up has developed where I think the market will make new rally highs until the VIX approaches the April/May lows for the VIX.

Wednesday, November 17, 2010

some charts... AAPL, AXP, GOOG, IBM

AAPL - Its price is right, and I did enter on this decline. I will add more if 295 is seen or when I feel the market has finished correcting.

AXP - The name is consolidated, with a trailing PE historically trading at 14, I have a limit order at 41.30.

GOOG - Its oversold, and told us their emerging businesses (mobile and billboard) is kicking into high gear. The weekly chart indicates 575 can be seen, but I like it here so I purchased, will add more at 575. (Do not think it will retrace its pre-quarter price, 550. Too much news of re-acceleration in the last quarter to justify that.)

IBM - I am such a fan of this company. It now trades at a trailing PE below 13, while having a 5yr growth rate of 15%. (I know Goldman issued a caution note due to gov. spending, but IBM is no CSCO. IBM's services reduce costs, CSCO is capital intensive costs. Two very different expenses.) I already added, and will add more at 140.

blind to the tic-by-tic

I am blind to the tic-by-tic quotes right now. My work computer needs to be upgraded to Java 6, but I only have access to Java 2, and my work computer does not let me upgrade independently. I need to find a system administrator to do it on the D.L., or quit my job.

When working in an environment knowing there is no upside or motivation, and your passion is else where, makes everyday more and more frustrating with the petty things I have to deal with. Trading eases that frustration, its an intraday escape to that passion.

The escape is closed off to me right now. So I officially made a decision today. I will quit once I have the legal and technical (web-site) side of my partnership up and running.

Tuesday, November 16, 2010

Market Thought... maybe, maybe not

Anything can happen, after all, life is a probability game whether you realize it or not. Some guy writes a book about it, calls the worst-case-scenario probabilities (with a bit of some of society's complexities mixed in) 'black swan', and BAM!, now everything is a 'black swan' to cause the market to go into a whirl-wind free-fall.

Fortunately, life does not work that way. Low probability events are low probability events, and do not happen often. What many perceive to be a 'black swan', is not really a black swan. From the nine years combing the web, listening and reading the chatter, I can safely say, there has always been soft chatter prior to a major event. Whether that chatter comes from the obvious sources, ie media/blogs, or numerical indicators, chatter always exists. (I literally only recall two times in 8 years, where chatter was not present before a major decline. One major one day market decline was caused by Greenspan during a speech in Asia. The other was caused in the summer when Israel retaliated against minor boarder dispute. Common occurrences, but the market decided to sell off. The dispute ended as suddenly as it started.)

While on the honeymoon, at the time the SP500 met the 62 SMA on the monthly SP500 chart, I started to think about how the market would act after the end of the year. To understand that, we have to know what the chatter is, and its potential future effect. They include...

1. A breakdown in corporate earnings. After Cisco reported, this one became obvious. The big caveat here is that CSCO is still a very solidly profitable company, reducing growth expectations by some 2%. CSCO is now trading at a PE and forward PE of 12-10. Not exactly a place a smart player would liquidate shares.

Regardless, the vast majority of earnings are stronger or very solid providing very good stability. I have seen 2011 SP500 estimates to be in the range of 87 (imo, too low) to 93 (reasonable). Slap a 14 multiple on the SP500, its potential range of 1218 to 1302. (A normalized SP500 multiple is 15, so I am accounting for sluggish CSCO like reports.)

2. EU Stabilization. I really do not like hearing about Ireland or Greece anymore, especially when Portugal and Spain bond auctions do very well. The 3yr monetary program is still very much in play, and slow but steady progress is being made in Greece. The program started in April/May of 2010, so we have a lot more time to go. Also, if the EU needs to, they will most definitely extend the monetary facility. (The dissenting voices are merely political theatre, nothing more.)

3. Employment. The weekly jobless claims were really good these past few weeks, and the increase in private sector employment is continues to be encouraging (event when temp. retail is backed out). This mitigates the risk in housing, non-performing loans and banks. (AXP is currently my favorite play here.)

4. The treasury rapidly rising. The negative chatter is that the rapid rise is a bad omen to come. I have serious reservations to this thesis. (Just like the reverse, when everyone sold off the market when the 10yr breached 3% fearing a deflationary cycle.) The 10yr typically trades between 1-2basis points above GDP. My interpretation is that the rise in the yield is due to a better GDP growth. With better GDP growth, the market PE will see more normal levels.

The list can go on, but above represent the increased chatter I have been hearing that can potentially snowball into something bigger. Although, I indicated why the snowball effect will not take place. The conditions are in place for a continued stable rise in the market, and once over extended (via PE multiple) a correction will take place. (Or whatever drummed up fear gives an excuse for a sell off.)

With this current decline, I have been a buyer of AAPL, GOOG, MF and IBM. I have wanted to get more of each, and enter AXP but decided to be disciplined and wait. Will add more AAPL near 295, GOOG near 575 and IBM near 140. I want to add AXP at 41.20.

(NOTE: China's inflation and potential regulation of food prices also was talked about today. I am not as concerned about this because strong economies have inflation. This is why market rates rise as an economy improves. They will take the steps needed to handle their economy. And history has shown, they have been pretty good at it.)


1. Covered the market protection

2. started entering IBM, MF

3. looking to enter GOOG, AAPL and more IBM amongst others

Facebook is an f-n tease

(I got my new computer, set up wireless access in 'our' home and got my apps and contact info for my iPhone 4. I feel whole again. But after completing my homework on equities and charts, i'm too tired to start uploading pics and typing an intricate post. But I do have time for a quick post on Facebook.)

There 'Project Titan' announcement today is a complete and ytter joke. It is bullshit. All facebook did today was to repackage and re-brand 'Facebook' as a social inbox. Facebook, at its core, is a communication tool. Nothing more, nothing less. All its services are predicated on informing 'your friends' of something. Whatever that 'something' is is up to the user who decides to tag and project the information. Its past, current and apparently its future method of communication is purely text-based messaging. Except in the future, you will be sending a message from Facebook with a cute 'bow' on it. (sarcasm)

During my Honeymoon I realized the true power of certain web-based communication tools. All free. Skype, iCall and Whatsapp (or Kik, similar service) allowed me to communicate, via wifi seamlessly for free. All I kept thinking about was how great these services were, and how awesome would it be if someone put them all together.

Skype offers great voice connectivity free when making Skype-to-Skype calls.

iCall offers a very decent free voice connectivity to any phone via your contact list due to a brief 10-15sec ad that must be heard prior to the call.

Whatsapp offers free cross platform (mobile OS systems) text unlimited messaging to another phone with the app. (The app cost 1.99, but Kik is the same service and it is free.)

Here I was using 3 services to do all my needed communicates, internationally, for free. The average person is not going to realize how to do this, but if Facebook just embraced who they really are (a communication tool), they could apply all these services under one roof, and make serious cash.

Facebook's critical mass gives it such leverage for such services, along with their traditional text-based messaging.

It would be so awesome if I could call a Facebook friend, facebook-to-facebook, for free via the facebook app. Or call a phone via facebook mobile app (after I listen to a short ad). Or txt via the facebook mobile app. Make the service app-to-app, so that it is cross Android, iOS or Blackberry platform.

This is what 'Project Titan' should have been, not some bullshit-repackaged set of services they already provide.

Sunday, November 14, 2010

Market Thought... many thanks

Had a great time at the wedding, along with a fantastic time exploring and relaxing on the honeymoon. This post was going to be much more involved with some pictures of the honeymoon, but I ran into some computer hurdles upon my return. I purchased the iPhone 4 on Sat, but the Mac I use for my iTunes needed an upgrade. (iTunes needs to go to the cloud!!) Originally, I planned on purchasing a new computer in September, but with the chatter about the new Mac Air and wedding expenses I decided to wait until I returned.

Long-story-short, I bought the Mac Air, gave the Genius' my old one so they can sync the old w/the new, and am left with no computer to upload my photos or sync my new iPhone. (I have an iPhone with none of my apps, and no contacts.) I feel so naked :)

Once I get the new computer, I will post what I wanted to on Saturday.

Now for the market...

I had a ton of limit orders in place prior to the hiatus. My market thesis was dead on, and all the limit orders to sell shares/options got executed.

The market approach the weekly and monthly resistance points. (An area, if not on my honeymoon, I would have shorted the market heavily. As I was telling my wifey over breakfast the day it was happening, coincidentally putting her back to sleep :)

Regardless, the question now is how much can the market correct?

A look at the daily indicates the market will see the 28 or 32 SMA in its next leg down. But if the big boys get scared again, I can see a scenario where the SP500 approaches a very strong support is at 1150. (The market will not break 1150.)

Although automated triggers sold off most of my holdings, I maintained a light market protection I took on before I left. (It lost a lot of value, but overshadowed by the gains.) I will cover this protection between the 28 and 38 SMA.

As the market approaches the SMA support, I will begin re-entering names. (ie, AAPL, IBM, AXP, PBR, MF, etc)

I am still bullish on the market because one of my conditions for a year end rally is playing out. The 10yr has broken its negative down trend, and this will facilitate the equities markets. (IMO, QE2 is a farce, and will not happen as we do not need it. Although the fed keeps the market in check by dipping its toes in and continuously touting it.)