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Tuesday, May 31, 2011

Market Thought... oh GOP

In my previous Market Thought post 'support', I stated "A part of me believes we will still be in an annoying market, until the uncertainties of the debt ceiling and the Greece report are provided, where direction is dictated by political theater and EU rumors." (These uncertainties come from the 'no boom-boom' post.  My titles are awesome :)

Germany was pretty forceful over this weekend with their support of Greece. (And it was about time. The bullshit reports and tit-for-tat non-sense coming out of the Euro Zone was pretty ridiculous.)  And tonight the GOP voted against their own make shift $2.4T debt ceiling. (At least now they can say they voted 'against' a fictitious debt ceiling to appease their tea-bagging-party constituents.  They are so unproductive.)

These macro uncertainties appear to be waning, and because of this the market player may actually be able to focus on the fundamentals of companies and the overall market.  Lets not forget, 2012 estimates is to have the SP500 at an eps of around $104 (as per Goldman). A PE range of 14-15, which is historically low, to the $104 will give a 2012 SP500 range of 1450-1560.  With individual stocks still very very inexpensive (a clear example is Apple or Google or IBM or POT or many other names), its hard not to like the market with macro uncertainties becoming more certain.


A ton of theories being presented via journalists and bloggers. Personally I do not know much more then the rest of them, but here is my 2 cents, and why I am excited about it:

1. Apple purchased a small map player a few years back.

2. Apple purchased (cloud based music) a few years back.

3. A patent was revealed a few days ago highlighting small storage of a song (or any other data type) locally, to start the application, then retrieve the rest from the cloud. Creating a 'real-time' access effect, and potentially unlimited storage capability.

3. Apple has iAds

4. iTunes platform as a distribution mechanism, and payment system.

5. We know Apple has been keeping track of the wifi locations users hit to build up their map system. (Info revealed during the congressional hearing about privacy and mobile phone tracking.)

When I look at this list, I see some very interesting individual applications, but when combined and glued together by a secure cloud, OMG, it can be an awesome opportunity.

1. Mapping with iAds, can produce location based Ads. Maybe partnering with a Groupon or LivingSocial to offer their inventory.  Or maybe the iAds devision is already working on their own deals service. (I do think the 'deal offering' is going to be the primary means of local advertising in the future.)

2. iTunes in the cloud can facilitate a payment platform potentially incorporating #1. (Square is doing it via their Register, but this would be less cumbersome.  Although, I also think Apple may acquire Square soon. They are in bed together too many times.)

3. The obvious chatter about file sharing, except with the patent, users can see potentially very quick real-time usage.

If certain services are done right, like being able to use Facebook connections, for #1, this could be a significant growth area for Apple.  This is obviously not factored into the stock, not by any means.

Sunday, May 29, 2011

some thoughts... Memorial Day, ITRI and AAPL

1. Happy Memorial Day weekend.
2. ITRI - On May 9th I posted a heads up on ITRI. The post links a nice interview with management as to when they foresee growth.  Their perception also correlates with anticipated date of standardization. Progress is being made (via communication, security component and vehicle standards), but until the standardization is completed, the real growth in the smart-grid will not take hold. We should have late stage progress by the end of this year or early next year. A recent report suggest $108B by 2020, or nearly $16B annually, for the smart grid.  Since ITRI is global, they will be a player in this.

In 2010, Itron's revenue was $2.25B. Currently the market is expecting a stagnant growth or contraction, which makes sense as Itron benefited from the US gov's stimulus package is no longer present. With out the stimulus their revenue was 1.6B in 2009 and 1.9B in 2010. So we should be expecting around 1.9-2B this year, with out the smart-grid spending kicking in.

So we know there will be support a year out, now we just have to figure out how to catch the knife :) Originally I indicated around 49, then wanted to dust to settle.  The intra-day chart on Friday showed some interesting strength.

Obviously, one day does not make a trend, but if anyone is looking to play this for the longer-term smart-grid trend, the intra-day strength along with the potential spending numbers, would suggest an initial entry is merited.

Stepping back from the intra-day charts, and trying to contemplate the current market's power to exaggerate compressed multiples, ITRI potentially could see the 45 area, if not lower.

I am a fan of the smart-grid, and think ITRI will be a major player.  Based on the above information, I will look to enter near 45. (But I am looking to actively trade this trend. If I was a buy-and-hold type, I would start averaging in at current levels, and would not sell until 2014.) I will be entering via the common, as the options are not appealing to me. Maybe in a year or two the options will be more liquid, and interesting to play.

3. AAPL - Apple is by far one of the best retailers out there. I had some iPhone drama this weekend. My home button stopped working properly. It took almost 10 hits to get the thing to function (each time). Looking at discussion boards I saw a small thread that highlighted the issue. Because the boards indicated a hardware issue, I brought it to the Apple Store (in Garden State Plaza mall) Sat morning. I was in at 10:15am (the store was relatively busy considering the mall just opened), set up my appointment for the Genius bar (at 10:40am, at this time the store was literally packed) and was out of the store with a new iPhone (no extra cost) by 11am.

The employees were super friendly, and accommodating. While I was waiting for the techie I was playing with their new iPad information system. It was really interesting to watch the current dynamic. When an individual approached a store representative, the employee would direct him/her to the table of the desired product and to look up the info on the iPad.  If they had more questions or wanted to talk to a representative they can request one from the iPad, and someone will come to them. I witnessed it work beautifully. I was impressed.

Basically, for me, my home button started loosing sensitivity so they gave me a new iPhone. (I consider myself a power user as I have 8 pages worth of apps, and use it quite a bit through out the day. And the discussion thread is quite small, so I can not imagine this being a big problem.)

Took me about an hour and a half to restore my phone settings from the iTunes back up. (It took me an extra half hour because the apps re-installed on my phone alphabetically instead of the organized structure I previously had it in. 8 pages worth of apps takes a half hour to organize :).

Friday, May 27, 2011

some trades... ATI, POT, ITRI

Some active trades...

1. ATI has approached resistance so I unload for the very short-term pull back. Once (or if) it pulls back some, I will re-enter.

2. POT - Similar to ATI, it has approached a resistance point. I sold a few options, and will re-enter upon a push back. I plan on holding the rest until the major resistance, from the downtrend, is achieved.

Update 11:06am, 05/27/2011 - I just noticed ITRI's weakness today. I am paying close attention. As indicated in a previous post, I would like to enter around 49. Given the current weakness, I will be looking for signs of the dust settling, and hopefully somewhere in the high 40s there will be an entry. A more detailed post will created over the weekend.

Thursday, May 26, 2011

Market Thought... support

Since the Market Thought post 'contradictions', the market looks to have found a footing. (As I hit publish on this post I am sure the futures will tank:)

Basically, transports remained solid, but the Semis tested their upper support level, and bounced.

With the small bounce, the market slightly reversed course. 1300 seemed inevitable, but now it looks to be staging a slow and steady push. 

The 62SMA, which should have been acting as short-term resistance is not.  In the short-term, this may suggest we re-test 1340.

A part of me believes we will still be in an annoying market, until the uncertainties of the debt ceiling and the Greece report are provided, where direction is dictated by political theater and EU rumors. But today's action showed promise of a deviation.  Maybe the big-boys saw Goldman's 2012 SP500 eps estimates of $104, and second guessed their selling. (Slap a PE range of 14-15, which is historically low, we have a 2012 SP500 range of 1450-1560. And we are approaching that time of the year where the big-boys start pricing in 2012 estimates.)  After all, cutting through all the bullshit, the market is a function of profitability, nothing more.

Tuesday, May 24, 2011

interesting... ATI, SU

Some interesting info today:

1. While listening to the intro to Mad Money, Cramer indicated that demand for Aerospace is not coming down.  He was reiterating comments from industry conferences and Boeing last week, stating demand is at the highest level since the 1970s.  I couldn't corroborate his info, but I know Aerospace is in a boom (its the reason I am a fan of ATI), so I will lean forward and assume it to be correct. So this new tidbit on the demand side makes me like ATI more.

ATI is currently bouncing off support, and may see some resistance near 68, but it is very oversold.

2. SU - I am having some reservations about Goldman's bullish oil call, but it made me take a hard and more interesting look at SU.  If Goldman is right, now maybe a good time to enter SU.  Sitting on long-term support, as the recent consolidation makes it look attractive.

It could chill here (between the 150SMA and 42) for a bit, while the other SMAs consolidate toward the 150SMAs, then move higher from current levels. I will be keeping a close eye on this one, but will allow the commodity to guide my entry.

Monday, May 23, 2011

Market Thought... update on technicals

The market started to cave.  Here is a breakdown of the support levels.
The market is breaking from the daily 62SMA.  There are levels of support near 1300 via the daily, along with the 150SMA near 1280.

There is added support near 1300 via the weekly 28SMA. 

There is some strong support around 1300, and given the level of uncertainty, the level may be tested.  I am still uneasy shorting this market given the already established multiple contraction.

Although, if the European Debt restructuring is handled improperly, and the US debt ceiling is not raised, the current trading dynamic of this market will be shot to hell and a new one will emerge.  This will cause me to sell all my positions, and look to be very negative as systemic issues will be abundant.

The indications at the moment suggest Greece will privatize assets, although the EU official touting the privatization will be better-then-expected publicly admitted to lying to ease markets. So his word is pretty much worthless.  Regardless, any type of privatization will facilitate the pseudo (soft/hard) restructuring of Greece, potentially containing the issue.

And Congress likes to keep Americans in suspense. Although I would love to see a constructive debate, and ultimately progress. (Not a half-ass debate where one sides starts sucking their thumbs, and refuses to discuss 'one' area of the debate.)

fyi... F, MF and BGCP

At the currently level BGCP is trading, it has a 8.7% dividend yield. (The yield is predicated on market activity, and I do not expect the yield to go below 7% with lower volume.) Also, technically, it is very oversold.

IMO, conditions are too enticing to pass up.  I am going to re-adjust my portfolio tomorrow. I will sell my positions in Ford and MF, and use those funds to purchase BGCP.

(F and MF are great long-term holds, but due to risk management I can not own all three right now. I will be taking a slight loss on F, and a loss on the MF position.)

holy crap... 3D w/out glasses!!!

Anyone that has an iPhone 4 or iPad/2 download the i3D app.

The app is proof of concept that 3D effect can take place with out glasses. If this is out there, Apple's 3D TV, that is being speculated about, may not be too far behind.

Really interesting stuff.

(I tagged this post as trades cause I think it is very relevant to the potential pipeline product from Apple.)

Saturday, May 21, 2011

Market Thought... no boom-boom?

Well, the world didn't blow up. Despite the world seeing its fair share of fucked up disasters this year already. I happen to enjoy life, and a functioning society. But going with the end-of-world theme, lets look at real viable systemic threats that can take us one step closer to a non-functioning society, which would equate to the end-of-the-world, at least as we know it.

1. An abruptly restructured European debt. (Or the PIGS kicked out of the Euro.)

Greece alone may not cause the crisis, but as the dominoes fall, the combination would. A credit crisis would happen, and the financial system would have to get saved again. Fortunately, Portugal got the loan this weekend, Ireland is making progress and Merkel voiced her support to all of Europe (ie Greece).

The powers-that-be seem like they are doing everything in their power to prevent a systemic issue, and I think they will succeed.  In the mean time, mid-to-late June we will see the progress report on Greece.

2. The debt ceiling not being raised.

Sheila Blair, Tim Geithner, Jamie Diamon, Warren Buffett and many other prominent figures did not mince their words, not raising the ceiling will be catastrophic. The political tit-for-tat is childish.  But really, does the current political leadership want to be the 'assholes' that cause America to default on its payments, remove its triple A status and unquestionably accelerate its decline from the economic status we currently benefit from?

Well, who wants to be the asshole?

I do not think any of the (relatively) smart leadership wants to be the asshole, so I think it will be raised. They have until Aug 2nd to decide not to be the assholes.

3. Arab Spring.

An entire region of the world is shifting toward a truly democratic way of life. It is quite beautiful to witness the people taking charge of their destiny, but the images and stories make it hard to watch.  The ton of uncertainty caused the market to flat-line in late Feb as people demanded more in Libya.

Syria does not look to be budging anytime soon, but Yemen hopefully shows promise. Hopefully progress is made to unleash the true potential of the regions people, as democracies usually do.

The only time this will pose a very real threat is if protests Saudi Arabia cause oil disruptions. The threat of this can cause shocks to the system. (But they seem to have things under relative control. Hopefully, the Monarchy is smart and gradually shifts control toward a Parliamentary system, similar to Great Britain.)

4. Natural Disasters.

With the market funk caused by Libya, the nuclear issue in Japan caused the market correction in March.  They are still dealing with cracks in the reactors, and this weekend we got two new ones. The volcano in Iceland erupts again, and another quake off Japan's coast.  These look to be less severe, and hopefully they say that way.  Lets not forget about the floods and the tornadoes in the south/mid west.

No one can control or foresee natural disasters, relatively speaking. We can only be prepared for the worst, and wish/pray for the best.

Four issues that cause macro-economic uncertainty are a lot for a given period of time.  Especially when the first two are in the hands of political leaders.  The global economy is flexible enough to with stand a level of geopolitical turmoil and natural disasters.  I can even say it is flexible enough to absorb some political stupidity.  But there is only so much it can take.  Some of the uncertainty has to be removed.

Right now, the very low multiples are suggesting we will enter a new recession, even though the 10yr is not. (Or the low multiples are a tremendous buying opportunity for a lot of names.) IMO, the only way we enter a new recession is if there is a systemic hit to the system. I only see two legitimate reasons for that, the first two listed above.

So, who wants to be the asshole? We will see in June and by August.

Friday, May 20, 2011

Market Thought... contradictions

I just see a bunch of contradictions right now.  First and foremost, its the value proposition of this market. LinkedIn excluded, valuations are not stretched by any means of the imagination. Even the momentum names are in such a funk that they seem interesting.

From a pure market perspective, the SP500 is sitting on support and not overbought.

The set up and value proposition indicates it has room to continue upward.

The greatest support to this thesis are the transports. The transports looks to want to keep rising, with a similar situation, bouncing off support and not overbought.

On the flip side, the semi index looks like it will break down. And Goldman's down grade may have provided the extra push for the semis to go lower.

Historically, the semis leads the Nasdaq. (Although I can make an argument with the monumental shift in computing via virtualization, cloud computing and emerging tablet computing, the driver of the semis, the PC market, is no longer as relevant. But it maybe too soon to presume the historical pattern of the 'semis-leading-the-market' will change this go around.) The down side seems minimal as there seems to be solid support around 56-57.

Then there is the VIX approaching the lows that have always made me uneasy. But I forced myself to remember my re-evaluation post, which suggests the VIX can very well go towards 10.

Its a mixed bag. An argument can be made for either side. My bias is obviously on the bullish side, especially when looking at valuations and freight use growth.

Basically, the way I am playing it is to not hesitate to enter desired positions, but unloading some of others to maintain a cash level to be able to take advantage of unmerited declines. (And any serious market decline I will view as unmerited.)

Thursday, May 19, 2011


1. Sold half my position in MF. (I wish this happened in the AM as it spiked. The selling was for portfolio risk management. Took a slight loss. I think their quarter was really good, and merits the stock going to at least 8.8-9. This is the reason I am still exposed to it. Technically it is not broken.)

2. Purchased ATI. (Added the common, this is a big reason as to why I had to unload some MF, and some of POT. See below.)

3. The additional position of POT I entered at 53.5, I unloaded at mid 55. I still the original position in the common, and will look to add 52.5 Sept Calls with current weakness. Preferably around low 53.

Wednesday, May 18, 2011

Passport Capital

I just saw the CNBC highlight of Passport Capital's short on AAPL, IBM and all tech via the Qs.

When I saw it I was sickened. I was just disgusted by it. The market has effectively priced out all premium for Apple's stock, and the trends are still very much in Apple's favor.  So anyone betting against the stock now is betting on a macro-effect that will cause the stock to go down. We all know what that 'macro-effect' is, the death of Steve Jobs.

I do not know if they still have the trade on, but if they do it seems like Passport Capital is betting on the spike downward when we find out Steve Jobs dies. Fucken Pathetic.

As for their IBM short. They are wrong, and will lose their money on that one.  Unless they have the power to push a brokerage house to issue a bullshit downgrade during market weakness so they make money or can get out of the trade. (similar to what happened a few months ago)

If my assessment is correct, I can careless about this firm, as I am disgusted.

(Apple should issue a $20-30Billion dollar buy back.  They do not have to start buying back now, but just to have the capability to support the stock to deter bullshit trades like these.)

fyi... 10yr yield bottom

I think the 10yr yield has hit a bottom. The decline is reflective of the lower US GDP growth, but I think that will reverse. Along with the 'sustained growth' Jamie Diamon talked about the other day, market mechnics are in play with the Fed no longer buying.

With the chatter coming out of the EU lately, especially from Merkel, we will not see it pose a systemic threat as we did last year.  (That is what caused the massive decline in yield last year.)

I think this is bullish for the equity markets.

Tuesday, May 17, 2011

Axion's progress

AXPW.ob issued their quarterly report this morning. The only thing I was looking for was progress with their respective developments. (The CEO was kinda fluffy with his endorsement of "triple digit growth" prospects this year. Something I do not care to see from a CEO, but the progress does speaks for itself.)

  • Our automated robotic line was delivered, has been assembled, aligned and each individual station has been commissioned. We are now utilizing the line to manufacture product. We have run product from end to end as we work on improving dwell times to achieve the design number of seconds allocated for each station.
  • To reduce our burn rate as we move forward with the commercialization of our PbC® products, we announced on March 8, 2011 that we received a series of orders for flooded lead-acid batteries. Production and shipment of these batteries began in the first quarter of 2011, and has continued to ramp up and will impact our revenue and margins in the second quarter of 2011. As previously disclosed, our production to fulfill these orders will generate a minimum of $3.5 million in new revenue, with a potential maximum of $8 million in new revenue in 2011. The maximum number is based on the purchaser's forecast, which was projected from their historical data.
  • Our work continues with Norfolk Southern (NS) on the hybrid locomotive and we have received a purchase order from NS for PbC batteries in amounts sufficient to enable NS to platform-test our product in large string configurations. At the same time, under a service contract with NS, we are performing duplicate hybrid locomotive battery testing of our PbC product, and our battery management system, at our New Castle facilities.
  • Work also continues on our PbC solution for the emerging hybrid vehicle market. Various forms of testing continue with European OEMs. In the United States we recently received notification from the Department of Energy that our proposal, under the Vehicles Technology Program DE-FOA-0000239, had passed the first round of criteria testing and had advanced to the final round of review. Our proposal was jointly submitted with a 'top three' US vehicle manufacturer and the grant, if awarded, will extend for a three-year period. Preliminary correspondence indicates a decision on awards will be made by July 1, 2011.
  • We have also finished assembling our onsite PowerCube™ and have begun testing on the first of the four 160 battery strings contained in that cube. Our proprietary battery management system is also undergoing full testing in that first configuration. The onsite PowerCube will allow us to test our product in numerous grid applications including backup power, power quality, load leveling and potential arbitrage utilization." 
You can compare for yourself from the previous update. A key date to remember is July 1, 2011. The grant will be interesting.  Right now, AXPW has about enough cash to last a 1-2 years without raising additional funds. The grant may prolong that need. If revenue from the PbC come online during that time, may prevent the need for one.

Monday, May 16, 2011

Market Thought... EU

Apparently a report is floating around that a default in Greece debt will have minimal effect on the capital ratios of the EU banks. Tier one will go from 9.5% to 9.2%. There are the obvious caveats that this is spread out over multiple banks, and that some will fail. But the larger caveat is that if Greece goes, it may cause a domino on Ireland and Portugal, which will require a bailout of the banks. (Ireland is making real progress, and Portugal is getting the bailout.)

To me, the report downplays the threat. If anything, its pretty bullish for the global economy, which should be good for global markets. This could be the reason why the SP500 has held up fairly well. (But I would expect rallies.)

When I only look at the SP500 chart, I see a sense of strength. But when I look at individual names, I wonder how the hell the market is holding up.

Its weird.

I see the action of AAPL and I scratch my head wondering. (Do you know if GOOG was to trade with AAPL's ex-cash multiple, Google's stock would be at 469.) I see AAPL, POT, DIS, AOL, ATI, etc, and I want to buy as much as I can.  But instead, my curiosity of the above development caused me to unload my AOL position to store up cash, hoping the market collapses and ATI goes to 64, DIS goes to 40.5, AOL goes lower. (Although I do not know if AOL goes lower. Here is a good article summing up its technical prowess that is one reason why I like it.)

I may also have to re-position my POT to more efficiently enter the various opportunities I am seeing.  Currently I have the common, but if ATI and DIS achieve my desired prices (along with expected additions if IBM and AAPL continue to fall), I will shift from the common and enter the Sept 50 or 52.5 strike Calls on POT.

As a hedge, and a play on potential continued weakness, I am looking to short OPEN via the July 90 Puts. It has some support at 85, but the heavy support is around 70.  (If it rallies from current levels or from the current level, I will look to add these puts. But the sweetest time to have taken this position was 4 days ago, when it was initially testing its 62 SMA.)

Google borrowing 3 Billion

Is this absolutely the most ridiculous thing I have heard today.  Google is to borrow $3billion. Its ridiculous because they have about $100/share in cash. (Their problem is having too much of it, now they are borrowing more!)

I understand the concept of taking advantage of low rates, but this only works when the company is optimizing their cash position. Google is not optimizing their position. With this offering they should also issue a buy-back. The ROI from the shares will dwarf the 1-3% cost of the borrowed cash.

With respect to company size and cash position, Google, Apple and other in similar positions, need to take their play book from IBM.

The inefficiency borderlines comical, if not tragic.

Saturday, May 14, 2011

thoughts on AAPL

A lack of real-time tic-by-tic action is like walking in a dark room where you can barely see whats in front of your face. (I managed to make successful trades this week, but I need tic-by-tic quotes.)

Around 3:15, AAPL started to decline. It was a pretty clear deviation from the market action.

It looked like as fund was selling (or forced to sell), with the increase in volume past 3:15pm.

For the most part, AAPL has been in a very tight consolidating triangular range since reporting earnings.

The intra-day tells me one big-boy took it down, making it appear as an obvious breakdown. The long-term technical trend is still intact.

The new concept with AAPL, that I have embraced, is that the market is no longer rewarding its growth. I can understand this. The big-boys are skeptical, and imo, the concept is embodied with this Martin T. Sosnoff's Forbes article. (Despite the fact that anyway AAPL is assessed, it is very inexpensive.)

Apple is in a position it has never known before.  The big boys that want to own AAPL, already own it. And the ones that did, but sold, need more reasons to own it with its mega-cap status. Basically, this means Apple must optimize their cash position. However, since we know Apple most likely will not issue a $20billion buy-back (no matter how much I would love to see them do this), as a trader, the current trading dynamic of the stock suggest AAPL will have a new trailing PE range.

The new range is between 16-18, and since I trade on the conservative, the targeted trailing PE is mid 16. (If AAPL issues a massive buy back, that changes the trading dynamic, and the trailing PE could expand again.)

AAPL has eps growth momentum for the next two quarters (so I doubt a buy back will be issued within the next 6 months), but this eps growth will place a new base for the stock.  With a trailing PE of 16, AAPL is currently trading at 340. However, when factoring next quarter's eps (5.60) AAPL will have a trailing PE of 16 when it is around the low 370s.

On Monday, I will be repositioning my AAPL Oct 350 calls to an equivalent amount (option number) to the 335 Oct Calls. (This will effectively increase my position in AAPL.)  I will not sell these calls until 370 is seen with AAPL's stock.


On Wednesday, May 11th, I received a notice of my final day at Pfizer.  My last day will be on August 12th.

I am very excited.

Going forward, the objective is to create a small investment partnership (more of an investment pool, not a hedge fund).  I have no illusions-of-grandeur here. I do not come from the street, and have no access to big-boy money. Basically, it will be a scalable vehicle where all my investment funds will go, along with anyone who has ever ask me to trade for them.

Over the next few days/weeks, I will be looking to seek the appropriate professionals to legally create the structure that I would like to implement.

I have wanted to experiment with this for some time now, but could not do it with a full time job.  Also, I had great momentum at Pfizer. So-much-so, I did not want to turn my back on it.  I am very grateful for the relationships I made there, and of very proud of my personal and professional achievements. My time at Wyeth-then-Pfizer, was invaluable. I learned a lot about the Pharma business, regulation, biotech processing and about my capabilities as an employee and manager.  But when May 2010 came along, and the department closure was announced, the weeks/months that followed no longer had that positive-can-do aura.  I potentially still would have been able to see personal professional growth, but it would be in the confines of a negative connotation (ie site closure).  I joined the company on an upswing, and am leaving when the local area is on a down swing. I much prefer working with a company on its upswing.  Watching the destruction around me, I felt now was a good time to create.

I am very excited and eager to create, with some fear in the mix (although my wife has enough fear and uncertainty for the both of us :).

Market Thoughts... only earnings matter

(NOTE: The time stamp for this post was Thursday May 12, not the 14th. Blogger was having issues on 05/13/2011 and their fix appears to have been a fickle one. They placed their own irregular tag on the post that allowed the post to have an original time stamp. But when I edited the irregular tag to conform with my own tags, the time stamp became 05/14.) 

Technical breakdowns galore within the commodity space. Or at least that is what you would think from the overall coverage commodities have been getting.  For instance, coal is not in a break down, nor is Gold.  On the other hand, Natural Gas has been a mess for a while. Silver is just fucked. Copper has broken down.


Oil is not in a breakdown, but its about to be.

Basically, what I am getting at is that the price discovery for all commodities is predicated on their own supply/demand issues.  Natural Gas has too much supply, so its price is and will be suppressed for a while.  Copper, known for as an economic barometer, but how well of an economic barometer is it when China has massive stock piles, and GLOBAL real-estate markets are in an utter rut? There is only so much copper needed for infra-structure builds, keeping in mind the level of appreciation is still fairly significant despite being down for the year.  Oil, imo the most transparent commodity as so much info exists for the layman to access, has been a wash for some time to not justify +$110, as I was touting since last month. (Although the rate of consumption-vs-production merits an $80-90 price.)

The supply/demand factor is playing out in these markets separately, whether investors/speculators what to believe this fact is another issue. But what exacerbates the supply/demand factor are the increased margin requirements.  Anyone trading the commodity futures got very scared about what they saw in the silver market over the past two weeks. Margin requirements increase very rapidly, and surprisingly. This is now happening within the oil market.

On top of the above two factors, we have the dollar that is about to break out. (Technically, it already broke from its multi-month negative SMA resistance.)

I was a bit early on my dollar call, but it looks to be playing out.

Adding to the commodities burst, were the reports today that the USDA indicated supplies topped forecasts. Albeit the levels were from 15yr lows, so I would argue the supply/demand aspect of agriculture is still very much intact.  However, the report, and in sympathy to the other commodity prices, along with the potential threat of increased margin requirements, are declining as well. (IMO, this is providing a nice opportunity to enter the fertilizer names. ie POT)

The current activity is making Bernanke look very good, again, with his 'transitory' thesis.

So, how does all this effect the SP500? Well, it should benefit it. Stocks are a function of earnings and earnings potential. Lower commodity price (ie input costs) mean higher profits.  But lets ignore this simple fact for this assessment, because regardless of a commodity's price, the SP500 is more associated to global GDP.  So with global GDP growing, so will the earnings of the SP500.

So with the SP500 declining in sympathy to a decline in commodity prices, is an opportunity to enter desired positions.

PS... I got some good news today. Do not think it is appropriate to share it right now, but I will over this weekend :)

Friday, May 13, 2011

sucks (or does blogger just suck?)

My detailed Market Thought... 'only earnings matter' post about commodities, directly after the 'quick thought' post, has disappeared. (I hate it when a long post get wiped out. All that time and effort is now lost.)

The last 24hrs there were technical issues with Blogger to which the site was 'read-only'. Unfortunately, posts were also lost.

For a company so ingrained into the cloud, a 97% accuracy rate is not good enough. If the cloud is to be mainstream, the services must be 99.997% accurate. (Especially from Google, that is making one of the biggest consumer efforts to make Cloud computing mainstream.)

Cloud computing up-time must be the same as the telecom network for the none-techies to rely on it.

Updated 05/14/2011: Obviously the post re-appeared, but I am keeping this post up here to remind me and any other Cloud Services bull the % up-time required. Also, Blogger's bullshit fix can be un-done by removing the specific tag they placed on the posts. (I noticed an irregularity within their tag, and placed my tag, and now the time stamp is fucked up.) The time stamp for the 'only earnings matter' post was Thursday May 12, not the 14th.

Wednesday, May 11, 2011

quick thought

The market wants to go down with commodities and the Euro. I think this is an opportunity because the Euro and commodities are going down due to issues within their own respective markets, not general economic concerns.

more on this tonight.

Tuesday, May 10, 2011


AOL is looking interesting again. It has become very oversold, while (not so obviously) maintaining a sense of bullishness (via the DMI).  And fundamentally, the company continues to perform well into its transition.

I am looking to enter near 19.00 tomorrow, for a bounce off of its oversold condition.

While the trade is mostly technical, in the back of my head is the Microsoft-Skype deal today.  Microsoft bought +600M users, and is looking to be a major push to its on-line efforts (along with some enterprise support). But its on-line biz is still a huge money loser, that needs a lot of help. I can see Mr. Softy going after the transformed AOL, to incorporate into its MSN division. (If not, whatever, the potential is only icing on the cake.)

update 05/11/2011 - I entered AOL.


I am feeling pretty naked. My work computer got 're-imaged' so that the back-end of the systems are more integrated. In the process, my applications were downgraded. Most importantly Java was downgraded to an obsoleted version. No real-time streamer works. (As a matter of fact, anyone that works for the largest 'most social' pharma company in the world should not be able to view web videos any longer. How fascinating is that fact?)

I was already scraping by before as I was unable to fully maximize my use of the real-time tic-by-tic. Now, I am trying to make do with the increased handicap. An obviously important tool (tic-by-tic equity-to-equity correlations and real-time equity/options correlations) is not available to me right now.

This also sucks because every time I would get frustrated I could just look at the real-time streamers and it would quite literally calm me down.  I lost a calming mechanism as well.

Monday, May 9, 2011

Market Thought... Greece

I have heard just about enough of Greece.  We all know Greece's debt situation is a mess, the market is already pricing in a 60-70% restructuring. But here we are again with Denis Gartman on Fast Money touting that Europe will be broken up, with the strong countries maintaining the Euro and weaker countries getting their own currencies again.  He was touting this crap, and I say the word crap very strongly, last year too.

Here is why it is crap. While there is a clear divide between economic strength of EU countries, their banks are not so evenly divided. If Europe decides to kick Spain, Ireland (even though they are actually making really good progress) Greece and Portugal out and they adopt their own currencies, the hit to the European banks will be so severe that all banks will need a bailout.  Because instead of a 60-70% restructuring, the market will hit the new currencies so severely that the 'PiGS' bonds will see a potential 200-400% market forced depreciation.  With the new Basel 3 requirements, the EU banks will not be able to handle this type of credit depreciation. It puts the entire system at risk, again.  Instead of bailing out the PIGS, the strong EU economies will have to bailout all the EU banks. (Pick your poison.)

The markets are not going to like any type of restructuring because of how inter-twined the banks are in this, but how the restructuring is handled will drive the level of negativity. If the market gets the restructuring that it is anticipating, and spread out over time, the negativity will be minimal and the SP500 may not breach 1300. But if the PIGS are forced out of the Euro, well, expect the SP500 to go toward 1190 (the 320SMA).

A unified country is not a fair proposition. California, New York, Delaware and other economically strong states subsidize New Mexico, Kansas and other economically weaker states. Its not fair, but it is the nature of the system.  This is no different in Europe.  The subsidy is the burden of the economically strong state. If the powers that be didn't like it, they should have never unified.

The thing is, the powers that be are not stupid, and they know all this already. And the PIGS countries know they can not leave the EU either. If they leave on their own, they will fuck over all the banks/funds they need to purchase their new debt. When I get fucked over I do not help the person who just fucked me. Basically, there will be no one to purchase their new debt, and they will not be able to survive on their own.

Common sense tells us that their will be sensible restructuring handled over time. It will be a burden, but not one that will derail the global economic recovery.

a heads up... ITRI

If anyone wants to play the smart grid, ITRI is the pure play on meters. (early cycle play on the trend)  It has consolidated significantly, and at pretty interesting valuations.  The consolidation is justified as the 'gov incentives' have dried up, but the overall trend for the sector is so very much intact.  But before it can see this trend, especially in the US, standards have to be created.

I have not entered yet, but I am watching the stock and the progress of the smart grid standards closely.

Here are a few notes:

1. management is projecting more growth between 2012-2015. (By the end of 2011 we should greater clarity on standardization. This will also benefit AXPW being a grid storage play.)

2. Daily chart indicates current levels are interesting for an initial entry.

3. longer-term charts, along with current PE valuations, indicate a potential bottom support at the mid 40s.

I will look to enter around 50. (Hopefully it can break 50, and I can get around 49 or so.)

Thursday, May 5, 2011

charts... F, POT, ATI and LLNW

F - The stock is sitting on trend and SMA support while being oversold. IMO, its lack of eps growth, quarter-to-quarter, will have it channel trade between low/mid 15-to-mid 17s until it starts growing eps, starts issuing a dividend or the market gives it a multiple higher than single digits (which it should).

POT - It has been consolidating from its high for some time now, and with the recent negativity, very oversold. The 150SMA was acting as a spring board until the market just lost its floor.  POT looks to be at the low end of the consolidated trading range. I was patiently waiting to re-enter the agricultural plays, and the technical set up is too enticing.

ATI - I am patiently waiting to get my enter point.  With the multiple additions to my portfolio, I can not afford little discipline right now.  Intra-day, high 68 is looking like a support, but I would like to enter around 66.

LLNW - Limelight (I keep thinking of the NYC nigh club back in the day, now a nice market place, when I use the company name :)  reported a nice quarter.  Tonight's interview on MadMoney just adds to the fundamental story.  The positive bias in AH looks like the support and oversold condition will act as a spring board.

As I indicated in previous posts, I will look to unload tomorrow. (This is for portfolio reasons, and not an indication of where I think it will go tomorrow.  I am a big fan of the fundamental story, and will continue to actively trade LLNW when the opportunity arises.)

trades and thoughts

Trades: I bought more Ford today.

Thoughts: I am patiently waiting on ATI, and other names.  Also, I strongly suggest reading the Feb 26th edition of the Economist, the special report "Feeding the World". (I can not link it, its on my iPhone.) There is a ton of qualitative and quantitative information in there. After you read the articles, look at how oversold, and corrected POT has become, I am sure you will purchase the stock.

I will post charts of F, ATI and POT later in the day.

Wednesday, May 4, 2011

Market Thought... curious

I find the 10yr treasury yield chart curious.

It is an obvious indication of slower GDP growth, but it is approaching an interesting level.  Last summer, when it breached the 3% mark, I indicated it would put the fear-of-god in the big boys causing them to sell the market, due to the deflationary implications. And that is what happened.

Hopefully the lesson that the market learned last summer was that earnings were not affected. The big boys were reminded that the stock market is a function of earnings, not 'indications of' GDP.

The EU PIGS solvency issue caused the systemic threat that facilitated the market sell off, and fear of deflation last summer. But what is the threat going to be this go around?  Will it be EU debt restructuring? There have been chatter of a 'soft' restructuring first, then a 'hard' restructuring.

The only time restructuring would matter is if we have heavy leverage within the system.  After Goldman (and other banks) reported, banks are not excessively leveraged. They are at about 12-1. The only time I heard about excessive margin use or leverage, was today with Cramer mentioning it. (I have no corroberation of the magnitude, outside of the contradiction from the banks. So I can not make a decision based on Cramer's qualitative statement. But I will keep my eyes and ears open, and try to look into it further.)

We will see how the market decides to take it. IMO, the above does not merit an SP500 move that breaks 1300, as highlighted in the 'charting' post.

Although the current movement in the 10yr note appears to be frustrating PIMCO's Bill Gross. Probably because, at the time being, he is on the wrong side of the trade.


1. So-So report from AOL, but as I stated the other day, with this bounce I unloaded. (But I do think it is seeing the synergies from their Ad efforts, and incorporating a technology component that the market will eventually like.)

2. Looking to add to POT at 53.30 and IBM. (I will let the intra-day guide my additions to IBM.)

update: Got more POT at 53.30 and IBM.

Still fairly cash heavy, but not hesitating to enter.

Tuesday, May 3, 2011

Market Thought... charting

With the strong push upward, there is a lot of support. The daily has the 14 SMA and horizontal support near 1340.

If the rally is to continue there should be a bounce off the 14 SMA or the 1340 level.

If negativity creeps in the psyche due to geopolitic or EU issues (potential Greek debt restructuring in June), the SP500 may bounce off the daily 62 SMA (1320), the weekly 28 SMA (1282) or worst case, the daily 150 SMA (around 1265). (The debt ceiling issue got pushed back today to Aug 2th due to tax receipts.)

Random notes on Apple and AOL:

1. I completely agree with Karen Finerman regarding her opinion on Apple's cash position.

2. AOL put their Pictela biz front and center before they report tomorrow. Could this be Armstrong's way of saying AOL is a technology company again? On top of a content company. (And I noticed has a large noticeable ad which leads me to think its from Pictela.)


1. entered MF

2. I am looking to add to POT, near the 150SMA on the daily.

3. I will most likely unload my position in AOL and LLNW after they report. (For a day-trade, and a willingness to hold through chaos that is earnings, AOL looks interesting here.) I am obviously anticipating the stocks act well after earnings, but regardless as to how they react, I will unload them after they report.

Monday, May 2, 2011

some thoughts... ATI, LLNW, MF

1. ATI - Last time I mentioned ATI was right before Easter. (This is a missed trade due to my previously incorrect market thesis.)  Since then, I witnessed it melt through its upper-level resistance, and have been patiently waiting for a consolidation.  I will be entering a position around high 66-68.

2. LLNW - The stock is oversold, and looks really interesting here, as it is sitting on a support trend.  The trading was corrupted by AKAM's quarterly report. If the margin issues translates to LLNW, it can break the current support. If they are the ones taking share away from AKAM and benefiting, then they could see a nice boost. Flip the coin and close your eyes :)  I still own the position I entered on the 27th, and unless it rallies to 7 before earnings, I plan on holding it through earnings.

3. MF - I was itching to enter a position today, but MF is not as consolidated as I would like. Also, the intra-day action did not entice me to enter. However, near 8.09 to 8.12 I will enter. (As I have been patiently waiting to do.)

trades... pot, pbr, aol

As indicated in my weekend post, I like the technical set up for POT, so purchased it.  The price was higher than what I originally wanted so I decided to unload PBR.

(I will keep an eye on PBR, but I will probably not enter it again until I get a better feeling of trust from the Brazilian Gov.)

Update 05/02/11, 11:28am: I am also going to hold AOL through their earning report on May 4th.

Sunday, May 1, 2011


Over the month of April there was a rise in page views by 131%.

Since I shifted to the blogger platform, in July 2010, the level of site page views has consistently increased (from July 2010-March 2011), rising slow and steady by 221%.

The jump in page views in April felt pretty cool, and me being who I am, was trying to figure out why.

1. I spread the word - I have not noticed myself increase the level of my comments on other blogs that would link back to here over the past few months. (This takes time, and I still have a full time job, which prevents me from doing this. Also, I care far more for the quality of information I obtain to trade very well verse promoting page views.) So I do not take this as the reason.

2. I posted the address on my info Facebook page and Tumblr page in Feb. This could of been a catalyst to the 'bots' that search these sites. Or they are real people viewing it, but I have not been actively promoting it via the social aspect.

3. You guys/gals are spreading the word. I'll take this as the reason :)

4. Google analytic is wrong. Probably, but I hope not.

I would like to think the reason is # 3 ;), which I think is pretty cool, and would like to send a truly heart felt thank you.

(and if its facebook or tumblr 'bots', shhh--eeee---sshhhh, the modem translation to 'thanks' ;)

Thanks, and to the new peeps, welcome.